Mercia Asset Management (AIM:MERC) - Share price, News & Analysis

Q: What is the Fair Price of MERC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

MERC (£0.29) is trading above our estimate of [[fair value]] (£0.08)

MERC fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	0/6
Past Performance	3/6
Financial Health	6/6
Dividends	3/6

MERC Stock Overview

Mercia Asset Management PLC is a private equity and venture capital firm specializing in incubation, seed EIS, early stage, emerging growth, mid venture, late stage and growth capital investments.

Rewards

Price-To-Earnings ratio (3.4x) is below the UK market (14.3x)

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of 84.4% per year for the next 3 years

High level of non-cash earnings

Unstable dividend track record

Latest financial reports are more than 6 months old

Mercia Asset Management Competitors

Livermore Investments Group

AIM:LIV

UK£84.3m

Manolete Partners

AIM:MANO

UK£131.2m

Frenkel Topping Group

AIM:FEN

UK£83.4m

Premier Miton Group

AIM:PMI

UK£185.2m

Price History & Performance

Summary of all time highs, changes and price drops for Mercia Asset Management
Historical stock prices
Current Share Price	UK£0.29
52 Week High	UK£0.44
52 Week Low	UK£0.28
Beta	1.3
1 Month Change	-3.36%
3 Month Change	-14.56%
1 Year Change	-17.27%
3 Year Change	-9.59%
5 Year Change	-16.67%
Change since IPO	-47.73%

Shareholder Returns

	MERC	GB Capital Markets	GB Market
7D	-1.7%	2.1%	2.4%
1Y	-17.3%	-15.6%	-6.7%

Return vs Industry: MERC underperformed the UK Capital Markets industry which returned -15.9% over the past year.

Return vs Market: MERC underperformed the UK Market which returned -6.8% over the past year.

Price Volatility

Is MERC's price volatile compared to industry and market?
MERC volatility
MERC Average Weekly Movement	3.1%
Capital Markets Industry Average Movement	4.2%
Market Average Movement	5.4%
10% most volatile stocks in GB Market	10.6%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: MERC is less volatile than 75% of UK stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: MERC's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2014	106	Mark Payton	https://www.mercia.co.uk

Mercia Asset Management PLC is a private equity and venture capital firm specializing in incubation, seed EIS, early stage, emerging growth, mid venture, late stage and growth capital investments. It invests in technology focusing on sectors such as digital entertainment, consumer services, media, retailing, energy, healthcare, industrials, materials, real estate, telecommunication services, gaming, internet, software, electronics and hardware, advanced materials, transportation, biosciences, engineering and specialist manufacturing, and life sciences. The firm invests in Midlands, North of the United Kingdom, the North of England, and Scotland.

Mercia Asset Management Fundamentals Summary

How do Mercia Asset Management's earnings and revenue compare to its market cap?
MERC fundamental statistics
Market Cap	UK£126.53m
Earnings (TTM)	UK£37.37m
Revenue (TTM)	UK£27.74m

3.4x

P/E Ratio

4.6x

P/S Ratio

Is MERC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MERC income statement (TTM)
Revenue	UK£27.74m
Cost of Revenue	UK£0
Gross Profit	UK£27.74m
Other Expenses	-UK£9.62m
Earnings	UK£37.37m

Last Reported Earnings

Sep 30, 2021

Next Earnings Date

Jul 05, 2022

Earnings per share (EPS)	0.085
Gross Margin	100.00%
Net Profit Margin	134.68%
Debt/Equity Ratio	0%

How did MERC perform over the long term?

See historical performance and comparison

Dividends

2.1%

Current Dividend Yield

7%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is MERC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MERC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for MERC. This is calculated by dividing MERC's market cap by their current preferred multiple.
What is MERC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£126.53m

MERC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.7x
Enterprise Value/EBITDA	8.6x
PEG Ratio	-0.04x

Price to Earnings Ratio vs Peers

How does MERC's PE Ratio compare to its peers?

MERC PE Ratio vs Peers

The above table shows the PE ratio for MERC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	22x
LIV Livermore Investments Group	4.1x	n/a	UK£84.3m
MANO Manolete Partners	35.7x	n/a	UK£131.2m
FEN Frenkel Topping Group	35.7x	40.6%	UK£83.4m
PMI Premier Miton Group	12.6x	0.7%	UK£185.2m
MERC Mercia Asset Management	3.4x	-84.4%	UK£126.5m

Forward PE

Price-To-Earnings vs Peers: MERC is good value based on its Price-To-Earnings Ratio (3.4x) compared to the peer average (22x).

Price to Earnings Ratio vs Industry

How does MERC's PE Ratio compare vs other companies in the GB Capital Markets Industry?

Price-To-Earnings vs Industry: MERC is good value based on its Price-To-Earnings Ratio (3.4x) compared to the UK Capital Markets industry average (9.6x)

Price to Earnings Ratio vs Fair Ratio

What is MERC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MERC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	3.4x
Fair PE Ratio	3.4x

Price-To-Earnings vs Fair Ratio: MERC is good value based on its Price-To-Earnings Ratio (3.4x) compared to the estimated Fair Price-To-Earnings Ratio (3.4x).

Share Price vs Fair Value

What is the Fair Price of MERC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MERC (£0.29) is trading above our estimate of fair value (£0.08)

Significantly Below Fair Value: MERC is trading above our estimate of fair value.

Price to Earnings Growth Ratio

PEG Ratio: MERC's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Mercia Asset Management forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-84.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: MERC's earnings are forecast to decline over the next 3 years (-84.4% per year).

Earnings vs Market: MERC's earnings are forecast to decline over the next 3 years (-84.4% per year).

High Growth Earnings: MERC's earnings are forecast to decline over the next 3 years.

Revenue vs Market: MERC's revenue is expected to decline over the next 3 years (-4.1% per year).

High Growth Revenue: MERC's revenue is forecast to decline over the next 3 years (-4.1% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if MERC's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Mercia Asset Management performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

43.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MERC has a high level of non-cash earnings.

Growing Profit Margin: MERC became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: MERC's earnings have grown significantly by 43.9% per year over the past 5 years.

Accelerating Growth: MERC has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: MERC has become profitable in the last year, making it difficult to compare its past year earnings growth to the Capital Markets industry (47.5%).

Return on Equity

High ROE: MERC's Return on Equity (20%) is considered high.

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Financial Health

How is Mercia Asset Management's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MERC's short term assets (£56.7M) exceed its short term liabilities (£8.1M).

Long Term Liabilities: MERC's short term assets (£56.7M) exceed its long term liabilities (£6.4M).

Debt to Equity History and Analysis

Debt Level: MERC is debt free.

Reducing Debt: MERC has not had any debt for past 5 years.

Debt Coverage: MERC has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: MERC has no debt, therefore coverage of interest payments is not a concern.

Balance Sheet

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Dividend

What is Mercia Asset Management current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.09%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MERC's dividend (2.09%) is higher than the bottom 25% of dividend payers in the UK market (1.86%).

High Dividend: MERC's dividend (2.09%) is low compared to the top 25% of dividend payers in the UK market (5.17%).

Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, MERC has been paying a dividend for less than 10 years.

Growing Dividend: MERC's dividend payments have increased, but the company has only paid a dividend for 2 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (7.1%), MERC's dividend payments are thoroughly covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (43.9%), MERC's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

4.2yrs

Average management tenure

CEO

Mark Payton (53 yo)

7.5yrs

Tenure

UK£493,000

Compensation

Dr. Mark Andrew Payton, Ph D., serves as the Chief Executive Officer at Mercia Asset Management PLC since December 2014 and serves as its Managing Director since January 2011 and is its Director since Dece...

CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD597.62K) is about average for companies of similar size in the UK market ($USD697.18K).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: MERC's management team is considered experienced (4.2 years average tenure).

Board Members

Experienced Board: MERC's board of directors are considered experienced (7.5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/29 00:00
End of Day Share Price	2022/06/29 00:00
Earnings	2021/09/30
Annual Earnings	2021/03/31