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 19.7% below its fair value

Earnings are forecast to grow 15.77% 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

-2.7%

ATM

-1.3%

NZ Food

-0.2%

NZ Market


1 Year Return

37.0%

ATM

9.7%

NZ Food

21.1%

NZ Market

Return vs Industry: ATM exceeded the NZ Food industry which returned 9.7% over the past year.

Return vs Market: ATM exceeded the NZ Market which returned 21.1% over the past year.


Shareholder returns

ATMIndustryMarket
7 Day-2.7%-1.3%-0.2%
30 Day21.9%8.9%2.4%
90 Day1.4%7.3%-0.2%
1 Year37.0%37.0%11.2%9.7%26.1%21.1%
3 Year526.6%526.6%68.7%54.9%59.2%38.2%
5 Year2416.7%2416.7%112.1%74.2%94.7%51.2%

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?

19.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ATM (NZ$15.1) is trading below our estimate of fair value (NZ$18.8)

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 (38.5x) compared to the Food industry average (18.8x).

PE vs Market: ATM is poor value based on its PE Ratio (38.5x) compared to the NZ market (20.1x).


Price to Earnings Growth Ratio

PEG Ratio: ATM is poor value based on its PEG Ratio (2.4x)


Price to Book Ratio

PB vs Industry: ATM is overvalued based on its PB Ratio (14.1x) 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?

15.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ATM's forecast earnings growth (15.8% per year) is above the savings rate (1.3%).

Earnings vs Market: ATM's earnings (15.8% per year) are forecast to grow faster than the NZ market (7.7% per year).

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

Revenue vs Market: ATM's revenue (15.5% per year) is forecast to grow faster than the NZ market (5% per year).

High Growth Revenue: ATM's revenue (15.5% 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 (27.6%)


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 4.4%.


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 had no debt 5 years ago.

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?

0.54%

Forecast Dividend Yield


Dividend Yield vs Market

companyn/amarketbottom25%3.0%markettop25%5.5%industryaverage4.1%forecastin3Years0.5%

Current dividend yield vs market & industry

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

What is the CEO of a2 Milk's salary, the management and board of directors tenure and is there insider trading?

2.0yrs

Average management tenure


CEO

Jayne Hrdlicka (57yo)

1.4yrs

Tenure

NZ$2,086,666

Compensation

Ms. Carla Hrdlicka, also known as Jayne, BA, MBA has been a Managing Director, Chief Executive Officer and Director of The a2 Milk Company Limited since July 16, 2018. Ms. Hrdlicka served as the Chief Exec ...


CEO Compensation Analysis

Compensation vs Market: Jayne's total compensation ($USD1.43M) is about average for companies of similar size in the NZ market ($USD1.43M).

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


Management Age and Tenure

2.0yrs

Average Tenure

Experienced Management: ATM's management team is not considered experienced ( 2 years average tenure), which suggests a new team.


Board Age and Tenure

3.0yrs

Average Tenure

62.5yo

Average Age

Experienced Board: ATM's board of directors are not considered experienced ( 3 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

SellNZ$134,704,01404 Dec 19
UBS Asset Management
EntityCompany
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Max PriceNZ$15.45
BuyNZ$222,747,59004 Dec 19
UBS Asset Management
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Max PriceNZ$15.70
BuyNZ$75,831,95601 Dec 19
UBS Asset Management
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Max PriceNZ$15.64
SellNZ$66,901,15501 Dec 19
UBS Asset Management
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Max PriceNZ$15.81
SellNZ$365,989,63424 Nov 19
UBS Asset Management
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Max PriceNZ$15.25
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Max PriceNZ$14.29
SellNZ$989,20321 Nov 19
Realindex Investments Pty Limited
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Shares75,690
Max PriceNZ$13.14
SellNZ$14,019,04021 Nov 19
Morgan Stanley, Investment Banking and Brokerage Investments
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Max PriceNZ$13.61
BuyNZ$43,480,51621 Nov 19
First Sentier Investors (Australia) IM Ltd
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Shares3,270,636
Max PriceNZ$13.29
BuyNZ$4,811,57121 Nov 19
Realindex Investments Pty Limited
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Shares365,488
Max PriceNZ$13.35
SellNZ$1,68621 Nov 19
First Sentier Investors (Australia) IM Ltd
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Shares131
Max PriceNZ$12.87
BuyNZ$4,049,80221 Nov 19
Morgan Stanley, Investment Banking and Brokerage Investments
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Max PriceNZ$4.69
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UBS Asset Management
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Max PriceNZ$13.13
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UBS Asset Management
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Max PriceNZ$13.15
SellNZ$64,117,64609 Oct 19
UBS Asset Management
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Max PriceNZ$14.06
BuyNZ$60,713,89009 Oct 19
UBS Asset Management
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BuyNZ$25,712,80530 Sep 19
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Max PriceNZ$14.32
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Max PriceNZ$14.24
SellNZ$24,118,53925 Sep 19
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UBS Asset Management
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Max PriceNZ$14.69
SellNZ$24,649,52402 Sep 19
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Max PriceNZ$14.18
BuyNZ$11,751,54802 Sep 19
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Shares828,997
Max PriceNZ$14.21
SellNZ$15,646,23913 Aug 19
UBS Asset Management
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Shares974,471
Max PriceNZ$16.12
BuyNZ$1,736,05813 Aug 19
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Shares108,520
Max PriceNZ$16.09
SellNZ$103,090,08912 Aug 19
UBS Asset Management
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Shares6,104,414
Max PriceNZ$17.41
BuyNZ$86,059,21412 Aug 19
UBS Asset Management
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Max PriceNZ$16.74
SellNZ$254,27601 Aug 19
UBS Asset Management
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Shares14,167
Max PriceNZ$17.95
BuyNZ$59,470,38501 Aug 19
UBS Asset Management
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Shares3,307,010
Max PriceNZ$17.98
SellNZ$4,974,56623 Jul 19
UBS Asset Management
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Shares295,679
Max PriceNZ$16.83
BuyNZ$8,901,71423 Jul 19
UBS Asset Management
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Max PriceNZ$16.85
SellNZ$61,861,35722 Jul 19
UBS Asset Management
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Max PriceNZ$16.57
BuyNZ$79,245,46322 Jul 19
UBS Asset Management
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Shares4,865,059
Max PriceNZ$16.45
SellNZ$138,145,56203 Jul 19
UBS Asset Management
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Shares9,639,821
Max PriceNZ$14.33
BuyNZ$124,448,17803 Jul 19
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Max PriceNZ$14.42
SellNZ$810,026,29412 Jun 19
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Max PriceNZ$15.62
BuyNZ$688,495,41412 Jun 19
UBS Asset Management
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Shares46,782,675
Max PriceNZ$15.24
SellNZ$4,550,00027 Feb 19
Peter Hinton
EntityIndividual
Shares325,000
Max PriceNZ$14.00

Ownership Breakdown

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


Management Team

  • Andrew Clarke

    Chief Scientific Advisor to the CEO

    • Tenure: 1.3yrs
  • David Akers

    Head of Investor Relations

    • Tenure: 0yrs
  • Jayne Hrdlicka (57yo)

    MD, CEO & Director

    • Tenure: 1.4yrs
    • Compensation: NZ$2.09m
  • Susan Massasso

    Chief Marketing Officer

    • Tenure: 6.3yrs
  • Peter Nathan

    Chief Executive Officer of Asia Pacific

    • Tenure: 2.5yrs
  • Craig Louttit

    Chief Financial Officer

    • Tenure: 5.7yrs
  • Shareef Khan

    Chief Operating Officer

    • Tenure: 0yrs
  • Jaron McVicar

    General Counsel & Company Secretary

    • Tenure: 3.1yrs
  • Lisa Burquest

    Chief People Officer

    • Tenure: 1.1yrs
  • Phil Rybinski

    Chief Technical Officer

    • Tenure: 0.7yrs

Board Members

  • Warwick Every-Burns (66yo)

    Independent Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: NZ$193.00k
  • Jesse Wu (62yo)

    Independent Non-Executive Director

    • Tenure: 2.6yrs
    • Compensation: NZ$213.00k
  • David L. Hearn (63yo)

    Chairman of the Board

    • Tenure: 4.8yrs
    • Compensation: NZ$231.55k
  • Jayne Hrdlicka (57yo)

    MD, CEO & Director

    • Tenure: 1.4yrs
    • Compensation: NZ$2.09m
  • Julia Hoare

    Deputy Chairman & Lead Non Executive Director

    • Tenure: 4.8yrs
    • Compensation: NZ$232.50k
  • Pip Greenwood

    Independent Non-Executive Director

    • Tenure: 0.4yrs

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$11.001b
  • 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 Uni ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/08 10:33
End of Day Share Price2019/12/05 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.