NZSE:SCL

Stock Analysis Report

NOT FOR DISTRIBUTION
Header cover image

Executive Summary

Scales Corporation Limited engages in the agribusiness activities in New Zealand.


Snowflake Analysis

Flawless balance sheet and good value.

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-3.0%

SCL

-2.3%

NZ Food

0.7%

NZ Market


1 Year Return

9.2%

SCL

12.8%

NZ Food

0.6%

NZ Market

Return vs Industry: SCL underperformed the NZ Food industry which returned 12.5% over the past year.

Return vs Market: SCL exceeded the NZ Market which returned 1.1% over the past year.


Shareholder returns

SCLIndustryMarket
7 Day-3.0%-2.3%0.7%
30 Day-0.2%-1.5%0.05%
90 Day3.9%5.2%8.9%
1 Year14.3%9.2%14.5%12.8%5.3%0.6%
3 Year64.7%43.4%57.8%48.5%42.1%21.3%
5 Year237.8%155.8%192.8%142.1%98.7%47.2%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Scales 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: SCL (NZ$5) is trading below our estimate of fair value (NZ$10.42)

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


Price To Earnings Ratio

PE vs Industry: SCL is good value based on its PE Ratio (15.6x) compared to the NZ Food industry average (16.5x).

PE vs Market: SCL is good value based on its PE Ratio (15.6x) compared to the NZ market (19.1x).


Price to Earnings Growth Ratio

PEG Ratio: SCL's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: SCL is overvalued based on its PB Ratio (2x) compared to the NZ Food industry average (1.3x).


Next Steps

Future Growth

How is Scales forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

-0.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SCL's earnings are forecast to decline over the next 3 years (-0.9% per year).

Earnings vs Market: SCL's earnings are forecast to decline over the next 3 years (-0.9% per year).

High Growth Earnings: SCL's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SCL's revenue (4% per year) is forecast to grow slower than the NZ market (5.6% per year).

High Growth Revenue: SCL's revenue (4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SCL's Return on Equity is forecast to be low in 3 years time (10.2%).


Next Steps

Past Performance

How has Scales performed over the past 5 years?

6.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SCL has a large one-off gain of NZ$19.6M impacting its December 31 2019 financial results.

Growing Profit Margin: SCL's current net profit margins (9.3%) are higher than last year (7.1%).


Past Earnings Growth Analysis

Earnings Trend: SCL's earnings have grown by 6.4% per year over the past 5 years.

Accelerating Growth: SCL's earnings growth over the past year (57.3%) exceeds its 5-year average (6.4% per year).

Earnings vs Industry: SCL earnings growth over the past year (57.3%) exceeded the Food industry 2.2%.


Return on Equity

High ROE: SCL's Return on Equity (13.5%) is considered low.


Next Steps

Financial Health

How is Scales's financial position?


Financial Position Analysis

Short Term Liabilities: SCL's short term assets (NZ$237.5M) exceed its short term liabilities (NZ$51.0M).

Long Term Liabilities: SCL's short term assets (NZ$237.5M) exceed its long term liabilities (NZ$148.7M).


Debt to Equity History and Analysis

Debt Level: SCL's debt to equity ratio (15.9%) is considered satisfactory.

Reducing Debt: SCL's debt to equity ratio has reduced from 28.4% to 15.9% over the past 5 years.

Debt Coverage: SCL's debt is well covered by operating cash flow (98.4%).

Interest Coverage: SCL's interest payments on its debt are well covered by EBIT (10.8x coverage).


Balance Sheet


Next Steps

Dividend

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

3.73%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: SCL's dividend (3.8%) is higher than the bottom 25% of dividend payers in the NZ market (2.94%).

High Dividend: SCL's dividend (3.8%) is low compared to the top 25% of dividend payers in the NZ market (5.39%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, SCL has been paying a dividend for less than 10 years.

Growing Dividend: SCL's dividend payments have increased, but the company has only paid a dividend for 5 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (59.2%), SCL's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SCL's dividends in 3 years are forecast to be covered by earnings (84.6% payout ratio).


Next Steps

  • Explore strong dividend paying companies in the Food, Beverage & Tobacco industry.

Management

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

9.6yrs

Average management tenure


CEO

Andy Borland

9.58yrs

Tenure

Mr. Andrew James Borland, also known as Andy, serves as the Chief Executive Officer of Scales Corporation Limited and has been its Managing Director since 2011. Mr. Borland serves as an Executive Director ...


Leadership Team

NamePositionTenureCompensationOwnership
Andrew Borland
CEO, MD & Executive Director9.58yrsno data0.69%
NZ$ 4.9m
Steve Kennelly
Chief Financial Officerno datano data0.11%
NZ$ 798.9k
Karen Morrish
Group Health & Safety3.58yrsno data0.053%
NZ$ 378.7k
Hamish Davis
Managing Director - Fern Ridge12.58yrsno datano data
Andrew van Workum
Chief Executive Officer of Mr Appleno datano data0.18%
NZ$ 1.3m
Kent Ritchie
Chief Executive Officer of Scales Logisticsno datano data0.23%
NZ$ 1.7m
John Sainsbury
Chief Executive Officer of Meateor Group5.42yrsno data0.15%
NZ$ 1.0m
Brett Frankel
President - Shelby Foods13.58yrsno datano data

9.6yrs

Average Tenure

Experienced Management: SCL's management team is seasoned and experienced (9.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Andrew Borland
CEO, MD & Executive Director9.58yrsno data0.69%
NZ$ 4.9m
Mark Hutton
Non Executive Independent Director9.58yrsNZ$97.00kno data
Po Sing Lai
Non Executive Director1.58yrsNZ$64.63kno data
Alan Isaac
Non Executive Independent Director6.17yrsNZ$100.00k0.020%
NZ$ 140.0k
Tim Goodacre
Non Executive Independent Chair3.17yrsNZ$140.00k0.011%
NZ$ 78.1k
Nick Harris
Non Executive Independent Director6.17yrsNZ$85.00k0.070%
NZ$ 500.0k
Nadine Tunley
Non-Executive Independent Director1.5yrsNZ$62.59kno data

4.7yrs

Average Tenure

Experienced Board: SCL's board of directors are considered experienced (4.7 years average tenure).


Ownership

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


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Insufficient data to determine if shareholders have been diluted in the past year.


Top Shareholders

Company Information

Scales Corporation Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Scales Corporation Limited
  • Ticker: SCL
  • Exchange: NZSE
  • Founded: 1897
  • Industry: Agricultural Products
  • Sector: Food, Beverage & Tobacco
  • Market Cap: NZ$710.453m
  • Shares outstanding: 142.09m
  • Website: https://www.scalescorporation.co.nz

Number of Employees


Location

  • Scales Corporation Limited
  • 52 Cashel Street
  • Christchurch
  • 8013
  • New Zealand

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SCLNZSE (New Zealand Stock Exchange)YesOrdinary SharesNZNZDJul 2014
S05DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJul 2014

Biography

Scales Corporation Limited engages in the agribusiness activities in New Zealand. The company operates through Food Ingredients, Horticulture, and Logistics segments. The Food Ingredients segment processes ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/08/07 10:46
End of Day Share Price2020/08/07 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.