LSE:MCRO

Stock Analysis Report

Micro Focus International

Executive Summary

Micro Focus International plc, an infrastructure software company, develops, sells, and supports software products and solutions to small and medium size enterprises.

Snowflake

Fundamentals

Established dividend payer and slightly overvalued.


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


Market Performance


7 Day Return

0.5%

MCRO

3.9%

GB Software

1.1%

GB Market


1 Year Return

-36.6%

MCRO

4.8%

GB Software

2.7%

GB Market

Return vs Industry: MCRO underperformed the UK Software industry which returned 4.8% over the past year.

Return vs Market: MCRO underperformed the UK Market which returned 2.7% over the past year.


Shareholder returns

MCROIndustryMarket
7 Day0.5%3.9%1.1%
30 Day-6.4%3.1%-1.7%
90 Day-37.4%-10.0%-2.7%
1 Year-17.8%-36.6%10.8%4.8%7.8%2.7%
3 Year-44.2%-63.2%3.9%-12.9%19.3%4.7%
5 Year27.4%-25.0%72.1%37.7%38.0%8.1%

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?

39.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: MCRO (£10.55) is trading below our estimate of fair value (£17.5)

Significantly Undervalued: MCRO is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: MCRO is unprofitable, so we can't compare its PE Ratio to the 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

Low 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 (3x).


Next Steps

Future Growth

How is Micro Focus International forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

112.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MCRO is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: MCRO is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: MCRO is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: MCRO's revenue is expected to decline over the next 3 years (-3.7% per year).

High Growth Revenue: MCRO's revenue is forecast to decline over the next 3 years (-3.7%).


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: MCRO's Return on Equity is forecast to be low in 3 years time (13%).


Next Steps

Past Performance

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

15.8%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: MCRO is unprofitable, but has reduced losses over the past 5 years at a rate of 15.8% 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 (7%).


Return on Equity

High ROE: MCRO has a negative Return on Equity (-3%), as it is currently unprofitable.


Return on Assets

ROA vs Industry: MCRO is currently unprofitable, so its Return on Assets is negative.


Return on Capital Employed

ROCE Improving: MCRO is currently unprofitable, so its Return on Capital Employed is negative.


Next Steps

Financial Health

How is Micro Focus International's financial position?


Financial Position Analysis

Short Term Liabilities: MCRO's short term assets ($3.6B) do not cover its short term liabilities ($3.9B)

Long Term Liabilities: MCRO's short term assets (3.6B) do not cover its long term liabilities (6.2B)


Debt to Equity History and Analysis

Debt Level: MCRO's debt to equity ratio (67.3%) is considered high

Reducing Debt: MCRO had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: MCRO's debt is not well covered by operating cash flow (17%).

Interest Coverage: MCRO is unprofitable, therefore interest payments are not well covered by earnings.


Balance Sheet

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

Debt Coverage by Assets: MCRO's debt is not covered by short term assets (assets are 0.8x debt).


Next Steps

Dividend

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

10.60%

Current Dividend Yield


Dividend Yield vs Market

company10.6%marketbottom25%2.0%markettop25%5.4%industryaverage2.8%forecastin3Years8.6%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: MCRO's dividend (10.6%) is higher than the bottom 25% of dividend payers in the UK market (2.01%).

High Dividend: MCRO's dividend (10.6%) is in the top 25% of dividend payers in the UK market (5.44%)

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

Growing Dividend: MCRO's dividend payments have increased 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 covered by earnings (52.6% payout ratio).


Next Steps

Management

What is the CEO of Micro Focus International's salary, the management and board of directors tenure and is there insider trading?

1.7yrs

Average management tenure


CEO

Stephen Murdoch (52yo)

1.6yrs

Tenure

US$7,710,068

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 has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the UK market.

Compensation vs Earnings: Stephen's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

1.7yrs

Average Tenure

57yo

Average Age

Experienced Management: MCRO's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Age and Tenure

2.4yrs

Average Tenure

57.5yo

Average Age

Experienced Board: MCRO's board of directors are not considered experienced ( 2.4 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

SellUS$11,534,60015 Jul 19
Kevin Loosemore
EntityIndividual
Role
Chairman of the Board
Executive Chairman
Shares650,000
Max PriceUS$18.52
BuyUS$49,16820 Feb 19
Richard Atkins
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares2,322.88
Max PriceUS$21.17
SellUS$49,14020 Feb 19
Richard Atkins
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares2,322.88
Max PriceUS$21.15

Ownership Breakdown


Management Team

  • Ian Fraser (58yo)

    Chief Human Resources Officer

    • Tenure: 1.8yrs
  • Kevin Loosemore (60yo)

    Executive Chairman

    • Tenure: 8.5yrs
    • Compensation: US$28.52m
  • Brian McArthur-Muscroft (55yo)

    CFO & Director

    • Tenure: 0.7yrs
  • Mike Phillips (56yo)

    Director of Mergers & Acquisition

    • Tenure: 1.8yrs
    • Compensation: US$19.32m
  • Jane Smithard (65yo)

    Group General Counsel

    • Tenure: 0.8yrs
  • Paul Rodgers (55yo)

    Chief Operating Officer

    • Tenure: 3.7yrs
  • Tim Brill

    Head of Corporate Communication & Investor Relations

    • Tenure: 0yrs
  • John Delk (58yo)

    Chief Marketing Officer and GM of Security

    • Tenure: 0yrs
  • Stephen Murdoch (52yo)

    CEO & Director

    • Tenure: 1.6yrs
    • Compensation: US$7.71m
  • Jerome Labat

    Chief Technology Officer

    • Tenure: 0yrs

Board Members

  • Lawton Fitt (66yo)

    Independent Non-Executive Director

    • Tenure: 2yrs
    • Compensation: US$83.00k
  • Karen Slatford (62yo)

    Senior Independent Non-Executive Director

    • Tenure: 0yrs
    • Compensation: US$180.00k
  • Kevin Loosemore (60yo)

    Executive Chairman

    • Tenure: 8.5yrs
    • Compensation: US$28.52m
  • Brian McArthur-Muscroft (55yo)

    CFO & Director

    • Tenure: 0.7yrs
  • Richard Atkins (67yo)

    Independent Non-Executive Director

    • Tenure: 5.5yrs
    • Compensation: US$135.00k
  • Amanda Brown (50yo)

    Independent Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: US$135.00k
  • Stephen Murdoch (52yo)

    CEO & Director

    • Tenure: 1.6yrs
    • Compensation: US$7.71m
  • Silke Scheiber (46yo)

    Independent Non-Executive Director

    • Tenure: 2.4yrs
    • Compensation: US$103.00k

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£3.501b
  • Shares outstanding: 331.99m
  • 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

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MCROLSE (London Stock Exchange)YesOrdinary SharesGBGBPMay 2005
MCFU.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMay 2005
M7Q7DB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 2005
M7Q3DB (Deutsche Boerse AG)YesOrdinary SharesDEGBPMay 2005
M7Q5DB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 2005
MFGPNYSE (New York Stock Exchange)SPON ADR EACH REP 1 ORD SHSUSUSDSep 2017
MFGP NBMV (Bolsa Mexicana de Valores)SPON ADR EACH REP 1 ORD SHSMXMXNSep 2017
M7Q8DB (Deutsche Boerse AG)SPON ADR EACH REP 1 ORD SHSDEEURSep 2017

Biography

Micro Focus International plc, an infrastructure software company, develops, sells, and supports software products and solutions to small and medium size enterprises. The company offers infrastructure soft ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/14 20:47
End of Day Share Price2019/10/14 00:00
Earnings2019/04/30
Annual Earnings2018/10/31


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.