NOT FOR DISTRIBUTION
Header cover image

Micro Focus International

Market Cap

UK£1.7b

Last Updated

2021/05/18 19:15 UTC

Data Sources

Company Financials +

Executive Summary

Micro Focus International plc engages in the enterprise software business in the United Kingdom, the United States, Germany, Canada, France, Japan, and internationally. More Details


Snowflake Analysis

Fair value with moderate growth potential.


Similar Companies

Share Price & News

How has Micro Focus International's share price performed over time and what events caused price changes?


Latest Share Price and Events

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

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


Market Performance


7 Day Return

5.6%

MCRO

-1.1%

GB Software

0.2%

GB Market


1 Year Return

11.5%

MCRO

2.7%

GB Software

22.8%

GB Market

Return vs Industry: MCRO exceeded the UK Software industry which returned 2.7% over the past year.

Return vs Market: MCRO underperformed the UK Market which returned 22.8% over the past year.


Shareholder returns

MCROIndustryMarket
7 Day5.6%-1.1%0.2%
30 Day-5.8%-7.2%0.1%
90 Day18.2%-6.8%5.1%
1 Year14.2%11.5%12.3%2.7%28.3%22.8%
3 Year-58.5%-69.9%14.0%0.4%9.4%-3.1%
5 Year-61.8%-75.9%28.3%4.5%47.0%19.3%

Long-Term Price Volatility Vs. Market

How volatile is Micro Focus International's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Micro Focus International 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: MCRO (£4.71) is trading below our estimate of fair value (£10.04)

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


Price To Earnings Ratio

PE vs Industry: MCRO is unprofitable, so we can't compare its PE Ratio to the UK Software industry average.

PE vs Market: MCRO is unprofitable, so we can't compare its PE Ratio to the UK market.


Price to Earnings Growth Ratio

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


Price to Book Ratio

PB vs Industry: MCRO is good value based on its PB Ratio (0.7x) compared to the GB Software industry average (4.1x).


Future Growth

How is Micro Focus International forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

113.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MCRO is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (0.9%).

Earnings vs Market: MCRO is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: MCRO's is expected to become profitable in the next 3 years.

Revenue vs Market: MCRO's revenue is expected to decline over the next 3 years (-4% per year).

High Growth Revenue: MCRO's revenue is forecast to decline over the next 3 years (-4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MCRO's Return on Equity is forecast to be low in 3 years time (18.2%).


Past Performance

How has Micro Focus International performed over the past 5 years?

-71.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MCRO is currently unprofitable.

Growing Profit Margin: MCRO is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: MCRO is unprofitable, and losses have increased over the past 5 years at a rate of 71.1% per year.

Accelerating Growth: Unable to compare MCRO's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: MCRO is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (3.3%).


Return on Equity

High ROE: MCRO has a negative Return on Equity (-92.52%), as it is currently unprofitable.


Financial Health

How is Micro Focus International's financial position?


Financial Position Analysis

Short Term Liabilities: MCRO's short term assets ($1.5B) do not cover its short term liabilities ($1.8B).

Long Term Liabilities: MCRO's short term assets ($1.5B) do not cover its long term liabilities ($6.1B).


Debt to Equity History and Analysis

Debt Level: MCRO's debt to equity ratio (146.8%) is considered high.

Reducing Debt: MCRO's debt to equity ratio has increased from 117.6% to 146.8% over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable MCRO has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: MCRO is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 21.2% per year.


Dividend

What is Micro Focus International current dividend yield, its reliability and sustainability?

2.18%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: MCRO's dividend (2.33%) is higher than the bottom 25% of dividend payers in the UK market (1.39%).

High Dividend: MCRO's dividend (2.33%) is low compared to the top 25% of dividend payers in the UK market (4.12%).


Stability and Growth of Payments

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

Growing Dividend: MCRO's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: MCRO is paying a dividend but the company is unprofitable.


Future Payout to Shareholders

Future Dividend Coverage: MCRO's dividends in 3 years are forecast to be well covered by earnings (19.5% payout ratio).


Next Steps

Management

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

1.6yrs

Average management tenure


CEO

Stephen Murdoch (53 yo)

3.17yrs

Tenure

US$1,663,514

Compensation

Mr. Stephen Murdoch has been the Chief Executive Officer and Director of Micro Focus International plc since March 19, 2018 and served as its Chief Operating Officer from September 2017 to March 19, 2018....


CEO Compensation Analysis

Compensation vs Market: Stephen's total compensation ($USD1.66M) is about average for companies of similar size in the UK market ($USD1.37M).

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


Leadership Team

Experienced Management: MCRO's management team is not considered experienced ( 1.6 years average tenure), which suggests a new team.


Board Members

Experienced Board: MCRO's board of directors are not considered experienced ( 2.7 years average tenure), which suggests a new board.


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.


Ownership Breakdown

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


Top Shareholders

Company Information

Micro Focus International plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Micro Focus International plc
  • Ticker: MCRO
  • Exchange: LSE
  • Founded: 1976
  • Industry: Application Software
  • Sector: Software
  • Market Cap: UK£1.689b
  • Shares outstanding: 335.53m
  • Website: https://www.microfocus.com

Number of Employees


Location

  • Micro Focus International plc
  • The Lawn
  • 22-30 Old Bath Road
  • Newbury
  • Berkshire
  • RG14 1QN
  • United Kingdom

Listings


Biography

Micro Focus International plc engages in the enterprise software business in the United Kingdom, the United States, Germany, Canada, France, Japan, and internationally. The company offers infrastructure so...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/05/18 19:15
End of Day Share Price2021/05/18 00:00
Earnings2020/10/31
Annual Earnings2020/10/31


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.