Johnson Matthey (LSE:JMAT) - Share price, News & Analysis

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

JMAT (£20.32) is trading below our estimate of [[fair value]] (£33.93)

JMAT fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	2/6
Past Performance	0/6
Financial Health	5/6
Dividends	2/6

JMAT Stock Overview

Rewards

Trading at 40.1% below our estimate of its fair value

Earnings are forecast to grow 19.34% per year

Risk Analysis

Dividend of 3.79% is not well covered by earnings or forecast to be in the next 3 years

Large one-off items impacting financial results

Profit margins (0.7%) are lower than last year (1.3%)

Johnson Matthey Competitors

Croda International

LSE:CRDA

UK£8.9b

Synthomer

LSE:SYNT

UK£1.1b

Victrex

LSE:VCT

UK£1.5b

Elementis

LSE:ELM

UK£610.4m

Price History & Performance

Summary of all time highs, changes and price drops for Johnson Matthey
Historical stock prices
Current Share Price	UK£20.32
52 Week High	UK£31.91
52 Week Low	UK£16.50
Beta	1.1
1 Month Change	-3.83%
3 Month Change	8.52%
1 Year Change	-34.39%
3 Year Change	-39.56%
5 Year Change	-29.44%
Change since IPO	463.66%

Recent News & Updates

Jun 19

Johnson Matthey (LON:JMAT) Has A Pretty Healthy Balance Sheet

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

May 29

Johnson Matthey (LON:JMAT) Is Increasing Its Dividend To UK£0.55

Johnson Matthey Plc's ( LON:JMAT ) dividend will be increasing on the 2nd of August to UK£0.55, with investors...

Shareholder Returns

	JMAT	GB Chemicals	GB Market
7D	-0.7%	2.5%	1.8%
1Y	-34.4%	-25.3%	-7.3%

Return vs Industry: JMAT underperformed the UK Chemicals industry which returned -25.3% over the past year.

Return vs Market: JMAT underperformed the UK Market which returned -7.3% over the past year.

Price Volatility

Is JMAT's price volatile compared to industry and market?
JMAT volatility
JMAT Average Weekly Movement	7.5%
Chemicals Industry Average Movement	7.0%
Market Average Movement	5.5%
10% most volatile stocks in GB Market	10.8%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: JMAT is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: JMAT's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1817	13,340	Liam Condon	https://www.matthey.com

Johnson Matthey Plc engages in the clean air, catalyst and hydrogen technology, and platinum group metals (PGM) service businesses in the United Kingdom, Germany, rest of Europe, the United States, rest of North America, China and Hong Kong, rest of Asia, and internationally. It operates through three segments: Clean Air, Efficient Natural Resources, and Other Markets. The Clean Air segment provides catalysts for emission control after-treatment systems to remove harmful emissions from vehicles, as well as cars, other light duty vehicles, trucks, buses, and non-road equipment powered by diesel and gasoline.

Johnson Matthey Fundamentals Summary

How do Johnson Matthey's earnings and revenue compare to its market cap?
JMAT fundamental statistics
Market Cap	UK£3.70b
Earnings (TTM)	UK£116.00m
Revenue (TTM)	UK£16.03b

32.0x

P/E Ratio

0.2x

P/S Ratio

Is JMAT overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
JMAT income statement (TTM)
Revenue	UK£16.03b
Cost of Revenue	UK£14.99b
Gross Profit	UK£1.04b
Other Expenses	UK£921.00m
Earnings	UK£116.00m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Nov 23, 2022

Earnings per share (EPS)	0.63
Gross Margin	6.47%
Net Profit Margin	0.72%
Debt/Equity Ratio	49.3%

How did JMAT perform over the long term?

See historical performance and comparison

Dividends

3.8%

Current Dividend Yield

127%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is JMAT 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 JMAT?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for JMAT. This is calculated by dividing JMAT's market cap by their current preferred multiple.
What is JMAT's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£3.70b

JMAT 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	0.3x
Enterprise Value/EBITDA	6.9x
PEG Ratio	1.7x

Price to Earnings Ratio vs Peers

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

JMAT PE Ratio vs Peers

The above table shows the PE ratio for JMAT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	88.1x
CRDA Croda International	27.7x	1.9%	UK£8.9b
SYNT Synthomer	5.4x	-8.4%	UK£1.1b
VCT Victrex	21.7x	9.7%	UK£1.5b
ELM Elementis	297.8x	46.9%	UK£610.4m
JMAT Johnson Matthey	32x	19.3%	UK£3.7b

Forward PE

Price-To-Earnings vs Peers: JMAT is good value based on its Price-To-Earnings Ratio (32x) compared to the peer average (88.1x).

Price to Earnings Ratio vs Industry

Price-To-Earnings vs Industry: JMAT is expensive based on its Price-To-Earnings Ratio (32x) compared to the UK Chemicals industry average (28.7x)

Price to Earnings Ratio vs Fair Ratio

What is JMAT'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.

JMAT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	32x
Fair PE Ratio	19.3x

Price-To-Earnings vs Fair Ratio: JMAT is expensive based on its Price-To-Earnings Ratio (32x) compared to the estimated Fair Price-To-Earnings Ratio (19.3x).

Share Price vs Fair Value

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

Below Fair Value: JMAT (£20.32) is trading below our estimate of fair value (£33.93)

Significantly Below Fair Value: JMAT is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: JMAT is poor value based on its PEG Ratio (1.7x)

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Future Growth

How is Johnson Matthey forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

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

19.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: JMAT's forecast earnings growth (19.3% per year) is above the savings rate (0.9%).

Earnings vs Market: JMAT's earnings (19.3% per year) are forecast to grow faster than the UK market (11% per year).

High Growth Earnings: JMAT's earnings are forecast to grow, but not significantly.

Revenue vs Market: JMAT's revenue is expected to decline over the next 3 years (-55.5% per year).

High Growth Revenue: JMAT's revenue is forecast to decline over the next 3 years (-55.5% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: JMAT's Return on Equity is forecast to be low in 3 years time (13.6%).

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Past Performance

How has Johnson Matthey performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

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

-20.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: JMAT has a large one-off loss of £259.0M impacting its March 31 2022 financial results.

Growing Profit Margin: JMAT's current net profit margins (0.7%) are lower than last year (1.3%).

Past Earnings Growth Analysis

Earnings Trend: JMAT's earnings have declined by 20.3% per year over the past 5 years.

Accelerating Growth: JMAT's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: JMAT had negative earnings growth (-40.2%) over the past year, making it difficult to compare to the Chemicals industry average (14.4%).

Return on Equity

High ROE: JMAT's Return on Equity (4.8%) is considered low.

Discover strong past performing companies

Financial Health

How is Johnson Matthey's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

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

Financial Position Analysis

Short Term Liabilities: JMAT's short term assets (£4.2B) exceed its short term liabilities (£3.2B).

Long Term Liabilities: JMAT's short term assets (£4.2B) exceed its long term liabilities (£1.1B).

Debt to Equity History and Analysis

Debt Level: JMAT's net debt to equity ratio (33.2%) is considered satisfactory.

Reducing Debt: JMAT's debt to equity ratio has increased from 46.8% to 49.3% over the past 5 years.

Debt Coverage: JMAT's debt is well covered by operating cash flow (50.3%).

Interest Coverage: JMAT's interest payments on its debt are well covered by EBIT (10.5x coverage).

Balance Sheet

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Dividend

What is Johnson Matthey 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

3.79%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: JMAT's dividend (3.79%) is higher than the bottom 25% of dividend payers in the UK market (1.87%).

High Dividend: JMAT's dividend (3.79%) is low compared to the top 25% of dividend payers in the UK market (5.16%).

Stability and Growth of Payments

Stable Dividend: JMAT's dividend payments have been volatile in the past 10 years.

Growing Dividend: JMAT's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (127.2%), JMAT's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (92.6%), JMAT's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

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

1.8yrs

Average management tenure

CEO

Liam Condon (53 yo)

0.25

Tenure

UK£984,000

Compensation

Mr. Liam Condon has been Chief Executive Officer at Johnson Matthey Plc since March 1, 2022. Mr. Condon has been Chairman of Management Board at Bayer CropScience Aktiengesellschaft. He is President of Bay...

CEO Compensation Analysis

Compensation vs Market: Liam's total compensation ($USD1.20M) is below average for companies of similar size in the UK market ($USD3.11M).

Compensation vs Earnings: Insufficient data to compare Liam's compensation with company performance.

Leadership Team

Experienced Management: JMAT's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.

Board Members

Experienced Board: JMAT's board of directors are considered experienced (3.6 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: JMAT 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	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31