NZSE:ATM

Stock Analysis Report

Executive Summary

The a2 Milk Company Limited, together with its subsidiaries, sells A2 protein type branded milk and related products in Australia, New Zealand, China, other Asian countries, the United Kingdom, and the United States.

Rewards

Trading at 1.2% below its fair value

Earnings are forecast to grow 16.11% per year

Earnings grew by 47% over the past year

Risk Analysis

No risks detected for ATM from our risk checks.


Snowflake Analysis

Flawless balance sheet with solid track record.


Similar Companies

Share Price & News

How has a2 Milk's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ATM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.0%

ATM

2.8%

NZ Food

1.5%

NZ Market


1 Year Return

12.2%

ATM

-1.6%

NZ Food

22.4%

NZ Market

Return vs Industry: ATM exceeded the NZ Food industry which returned -1.6% over the past year.

Return vs Market: ATM underperformed the NZ Market which returned 22.4% over the past year.


Shareholder returns

ATMIndustryMarket
7 Day3.0%2.8%1.5%
30 Day2.2%-1.2%0.3%
90 Day9.6%2.6%8.8%
1 Year12.2%12.2%-0.5%-1.6%27.3%22.4%
3 Year585.4%585.4%61.4%48.0%62.3%41.2%
5 Year2773.7%2773.7%117.8%78.4%97.1%53.2%

Price Volatility Vs. Market

How volatile is a2 Milk's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is a2 Milk undervalued compared to its fair value and its price relative to the market?

1.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ATM (NZ$16.38) is trading below our estimate of fair value (NZ$16.58)

Significantly Below Fair Value: ATM is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: ATM is poor value based on its PE Ratio (41.7x) compared to the Food industry average (16.1x).

PE vs Market: ATM is poor value based on its PE Ratio (41.7x) compared to the NZ market (20.8x).


Price to Earnings Growth Ratio

PEG Ratio: ATM is poor value based on its PEG Ratio (2.6x)


Price to Book Ratio

PB vs Industry: ATM is overvalued based on its PB Ratio (15.3x) compared to the NZ Food industry average (1.2x).


Next Steps

Future Growth

How is a2 Milk forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

16.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ATM's forecast earnings growth (16.1% per year) is above the savings rate (1.3%).

Earnings vs Market: ATM's earnings (16.1% per year) are forecast to grow faster than the NZ market (7% per year).

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

Revenue vs Market: ATM's revenue (16.7% per year) is forecast to grow faster than the NZ market (5.5% per year).

High Growth Revenue: ATM's revenue (16.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ATM's Return on Equity is forecast to be high in 3 years time (27.8%)


Next Steps

Past Performance

How has a2 Milk performed over the past 5 years?

65.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ATM has high quality earnings.

Growing Profit Margin: ATM's current net profit margins (22.1%) are higher than last year (21.2%).


Past Earnings Growth Analysis

Earnings Trend: ATM's earnings have grown significantly by 65% per year over the past 5 years.

Accelerating Growth: ATM's earnings growth over the past year (47%) is below its 5-year average (65% per year).

Earnings vs Industry: ATM earnings growth over the past year (47%) exceeded the Food industry -9.7%.


Return on Equity

High ROE: ATM's Return on Equity (36.5%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is a2 Milk's financial position?


Financial Position Analysis

Short Term Liabilities: ATM's short term assets (NZ$675.7M) exceed its short term liabilities (NZ$205.4M).

Long Term Liabilities: ATM's short term assets (NZ$675.7M) exceed its long term liabilities (NZ$227.0K).


Debt to Equity History and Analysis

Debt Level: ATM is debt free.

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

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

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


Balance Sheet

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

Debt Coverage by Assets: Insufficient data to determine if ATM's debt is covered by short term assets.


Next Steps

Dividend

What is a2 Milk's current dividend yield, its reliability and sustainability?

0.46%

Forecast Dividend Yield


Dividend Yield vs Market

Notable Dividend: Unable to evaluate ATM's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate ATM's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ATM's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ATM's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ATM's dividend in 3 years as they are not forecast to pay a notable one for the NZ market.


Next Steps

Management

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

1.5yrs

Average management tenure


CEO

Geoff Babidge (66yo)

0.2yrs

Tenure

NZ$1,457,573

Compensation

Mr. Geoffrey H. Babidge, also known as Geoff, (Geo), B.Comm., ACA serves as Chief Executive Officer at The a2 Milk Company Limited since 2020 and served as its Interim Chief Executive Officer since Decembe ...


CEO Compensation Analysis

Compensation vs Market: Geoff's total compensation ($USD963.81K) is about average for companies of similar size in the NZ market ($USD1.16M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Geoffrey Babidge
Chief Executive Officer0.2yrsNZ$1.46mno data
Race Strauss
Chief Financial Officer0.08yrsno datano data
Shareef Khan
Chief Operating Officer0yrsno data0.027% NZ$3.3m
David Akers
Head of Investor Relations0yrsno datano data
Jaron McVicar
General Counsel & Company Secretary3.3yrsno datano data
Susan Massasso
Chief Marketing Officer6.4yrsno data0.11% NZ$13.4m
Lisa Burquest
Chief People Officer1.3yrsno datano data
Andrew Clarke
Chief Scientific Advisor to the CEO1.5yrsno data0.020% NZ$2.5m
Peter Nathan
Chief Executive Officer of Asia Pacific2.7yrsno data0.0081% NZ$982.4k
Craig Louttit
Deputy Chief Financial Officer0yrsno data0.014% NZ$1.6m

1.5yrs

Average Tenure

Experienced Management: ATM's management team is not considered experienced ( 1.5 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Warwick Every-Burns
Independent Non-Executive Director3.5yrsNZ$193.00k0.014% NZ$1.6m
Jen-Wei Wu
Independent Non-Executive Director2.8yrsNZ$213.00k0.0037% NZ$442.4k
David L. Hearn
Chairman of the Board4.9yrsNZ$231.55k0.014% NZ$1.6m
Julia Hoare
Deputy Chairman & Lead Non Executive Director4.9yrsNZ$232.50k0.0068% NZ$818.4k
Philippa Greenwood
Independent Non-Executive Director0.6yrsno datano data

3.5yrs

Average Tenure

63yo

Average Age

Experienced Board: ATM's board of directors are considered experienced (3.5 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: ATM insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

The a2 Milk Company Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: The a2 Milk Company Limited
  • Ticker: ATM
  • Exchange: NZSE
  • Founded: 2000
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Market Cap: NZ$12.054b
  • Shares outstanding: 735.88m
  • Website: https://www.thea2milkcompany.com

Number of Employees


Location

  • The a2 Milk Company Limited
  • 51 Shortland Street
  • Level 10
  • Auckland
  • 1010
  • New Zealand

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ATMNZSE (New Zealand Stock Exchange)YesOrdinary SharesNZNZDApr 2004
ACOP.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDApr 2004
14LDB (Deutsche Boerse AG)YesOrdinary SharesDEEURApr 2004
A2MASX (Australian Securities Exchange)YesOrdinary SharesAUAUDApr 2004
A2MCHIA (Chi-X Australia)YesOrdinary SharesAUAUDApr 2004
ACOP.YOTCPK (Pink Sheets LLC)UNSPONSRED ADSUSUSDMay 2019

Biography

The a2 Milk Company Limited, together with its subsidiaries, sells A2 protein type branded milk and related products in Australia, New Zealand, China, other Asian countries, the United Kingdom, and the United States. The company offers fresh milk under the a2 Milk brand; and infant formula under the a2 Platinum brand. It also provides a2 Platinum premium stage 4 junior milk drink; premium a2 Milk powder blended with Manuka honey; and a2 Platinum premium pregnancy milk formula. The company was formerly known as A2 Corporation Limited and changed its name to The a2 Milk Company Limited in April 2014. The a2 Milk Company Limited was founded in 2000 and is based in Auckland, New Zealand. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/22 10:33
End of Day Share Price2020/02/21 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


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.