AIM:SAA

Stock Analysis Report

Executive Summary

M&C Saatchi plc provides advertising and marketing services in the United Kingdom, Europe, the Middle East, Africa, Asia, Australia, and the Americas.

Rewards

Trading at 51.2% below its fair value

Became profitable this year

Pays a high and reliable dividend of 13.6%

Risk Analysis

Has a high level of debt

Dividend of 13.6% is not well covered by earnings

Highly volatile share price over past 3 months

Large one-off items impacting financial results

+ 2 more risks


Snowflake Analysis

Undervalued established dividend payer.

Share Price & News

How has M&C Saatchi's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SAA's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-14.3%

SAA

-12.9%

GB Media

-8.6%

GB Market


1 Year Return

-77.7%

SAA

-5.7%

GB Media

-1.3%

GB Market

Return vs Industry: SAA underperformed the UK Media industry which returned 1.9% over the past year.

Return vs Market: SAA underperformed the UK Market which returned 2% over the past year.


Shareholder returns

SAAIndustryMarket
7 Day-14.3%-12.9%-8.6%
30 Day-35.5%-13.9%-8.4%
90 Day-46.6%-13.7%-5.3%
1 Year-76.8%-77.7%-2.1%-5.7%4.0%-1.3%
3 Year-75.3%-77.5%-21.5%-31.5%7.6%-6.1%
5 Year-75.6%-78.7%-17.5%-34.3%23.4%-4.8%

Price Volatility Vs. Market

How volatile is M&C Saatchi's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is M&C Saatchi undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SAA (£0.81) is trading below our estimate of fair value (£1.65)

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


Price To Earnings Ratio

PE vs Industry: SAA is good value based on its PE Ratio (4.6x) compared to the Media industry average (23.3x).

PE vs Market: SAA is good value based on its PE Ratio (4.6x) compared to the UK market (17.3x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate SAA's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: SAA is good value based on its PB Ratio (1x) compared to the GB Media industry average (1.3x).


Next Steps

Future Growth

How is M&C Saatchi forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

-14.8%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if SAA's forecast earnings growth is above the savings rate (0.5%).

Earnings vs Market: Insufficient data to determine if SAA's earnings are forecast to grow faster than the UK market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: SAA's revenue is expected to decline over the next 3 years (-14.8% per year).

High Growth Revenue: SAA's revenue is forecast to decline over the next 3 years (-14.8% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

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


Next Steps

Past Performance

How has M&C Saatchi performed over the past 5 years?

33.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SAA has a large one-off gain of £9.7M impacting its June 30 2019 financial results.

Growing Profit Margin: SAA became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: SAA's earnings have grown significantly by 33% per year over the past 5 years.

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

Earnings vs Industry: SAA has become profitable in the last year, making it difficult to compare its past year earnings growth to the Media industry (3.7%).


Return on Equity

High ROE: SAA's Return on Equity (22.3%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is M&C Saatchi's financial position?


Financial Position Analysis

Short Term Liabilities: SAA's short term assets (£183.3M) exceed its short term liabilities (£172.6M).

Long Term Liabilities: SAA's short term assets (£183.3M) exceed its long term liabilities (£61.1M).


Debt to Equity History and Analysis

Debt Level: SAA's debt to equity ratio (53.5%) is considered high.

Reducing Debt: SAA's debt to equity ratio has increased from 23.4% to 53.5% over the past 5 years.

Debt Coverage: SAA's debt is well covered by operating cash flow (36.3%).

Interest Coverage: SAA's interest payments on its debt are well covered by EBIT (7.3x coverage).


Balance Sheet

Inventory Level: SAA has a low level of unsold assets or inventory.

Debt Coverage by Assets: SAA's debt is covered by short term assets (assets are 4.5x debt).


Next Steps

Dividend

What is M&C Saatchi's current dividend yield, its reliability and sustainability?

13.60%

Current Dividend Yield


Dividend Yield vs Market

company13.6%marketbottom25%1.9%markettop25%5.4%industryaverage4.7%forecastin3Years14.5%

Current dividend yield vs market & industry

Notable Dividend: SAA's dividend (13.6%) is higher than the bottom 25% of dividend payers in the UK market (1.92%).

High Dividend: SAA's dividend (13.6%) is in the top 25% of dividend payers in the UK market (5.37%)


Stability and Growth of Payments

Stable Dividend: SAA's dividends per share have been stable in the past 10 years.

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


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (62.9%), SAA's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SAA's dividends in 3 years are not forecast to be well covered by earnings (94% payout ratio).


Next Steps

Management

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

11.1yrs

Average management tenure


CEO

David Kershaw 0

UK£421,000

Compensation

Mr. David Kershaw serves as the Chief Executive Officer at M&C Saatchi. Mr. Kershaw joined Saatchi & Saatchi in 1982, served as Managing Director since 1990 and also as its Chief Executive & Chairman of th ...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD542.02K) is above average for companies of similar size in the UK market ($USD325.23K).

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


Leadership Team

NamePositionTenureCompensationOwnership
Jeremy Sinclair
Chairman34.1yrsUK£420.00k4.92% £3.8m
David Kershaw
Chief Executive & Executive Director0yrsUK£421.00k4.92% £3.8m
William Muirhead
Executive Director0yrsUK£421.00k4.92% £3.8m
Charles Saatchi
Founder & Partner0yrsno datano data
Maneck Kalifa
Finance Director & Director0.9yrsno data0.030% £23.3k
Richard Storey
Chief Strategy Officer0yrsno datano data
Richard Alford
Joint Managing Director12.8yrsno datano data
Moray MacLennan
Worldwide Chief Executive Officer11.1yrsno datano data
Jane Boardman
Chief Executive of Talk PR - Subsidiary0yrsno datano data
Andy Blackstone
Company Secretary0yrsno datano data

11.1yrs

Average Tenure

Experienced Management: SAA's management team is seasoned and experienced (11.1 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: SAA insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 8%.


Top Shareholders

Company Information

M&C Saatchi plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: M&C Saatchi plc
  • Ticker: SAA
  • Exchange: AIM
  • Founded: 1995
  • Industry: Advertising
  • Sector: Media
  • Market Cap: UK£77.549m
  • Shares outstanding: 96.22m
  • Website: https://www.mcsaatchiplc.com

Number of Employees


Location

  • M&C Saatchi plc
  • 36 Golden Square
  • London
  • Greater London
  • W1F 9EE
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SAAAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPJul 2004
MSAA.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJul 2004

Biography

M&C Saatchi plc provides advertising and marketing services in the United Kingdom, Europe, the Middle East, Africa, Asia, Australia, and the Americas. The company offers its services in the areas of media buying, direct marketing, talent management, mobile marketing, research agency, Website construction, branding and digital marketing, design, marketing strategy, finished art and production, marketing consultant, and sport sponsorship and entertainment PR agency. The company was founded in 1995 and is headquartered in London, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/27 20:31
End of Day Share Price2020/02/27 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.