NZSE:FBU

Stock Analysis Report

Executive Summary

Fletcher Building Limited, together with its subsidiaries, manufactures and distributes building products in New Zealand, Australia, North America, Asia, Europe, and internationally.

Rewards

Trading at 43.2% below its fair value

Earnings are forecast to grow 9.29% per year

Became profitable this year

Risk Analysis

Debt is not well covered by operating cash flow

Unstable dividend track record

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

Undervalued with adequate balance sheet and pays a dividend.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

2.3%

FBU

-1.2%

NZ Basic Materials

0.07%

NZ Market


1 Year Return

8.5%

FBU

25.7%

NZ Basic Materials

22.2%

NZ Market

Return vs Industry: FBU underperformed the NZ Basic Materials industry which returned 25.7% over the past year.

Return vs Market: FBU underperformed the NZ Market which returned 22.2% over the past year.


Shareholder returns

FBUIndustryMarket
7 Day2.3%-1.2%0.07%
30 Day0%-1.7%3.4%
90 Day2.3%9.2%3.3%
1 Year14.2%8.5%31.0%25.7%27.3%22.2%
3 Year-40.5%-49.1%6.3%-6.1%62.7%41.3%
5 Year-16.9%-35.6%48.5%19.8%95.1%51.6%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Fletcher Building undervalued compared to its fair value and its price relative to the market?

43.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FBU (NZ$5.25) is trading below our estimate of fair value (NZ$9.24)

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


Price To Earnings Ratio

PE vs Industry: FBU is good value based on its PE Ratio (18.2x) compared to the Basic Materials industry average (24.6x).

PE vs Market: FBU is good value based on its PE Ratio (18.2x) compared to the NZ market (19.7x).


Price to Earnings Growth Ratio

PEG Ratio: FBU is poor value based on its PEG Ratio (2x)


Price to Book Ratio

PB vs Industry: FBU is good value based on its PB Ratio (1.1x) compared to the XO Basic Materials industry average (1.7x).


Next Steps

Future Growth

How is Fletcher Building forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

9.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FBU's forecast earnings growth (9.3% per year) is above the savings rate (1.3%).

Earnings vs Market: FBU's earnings (9.3% per year) are forecast to grow faster than the NZ market (7.9% per year).

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

Revenue vs Market: FBU's revenue is expected to decline over the next 3 years (-1.3% per year).

High Growth Revenue: FBU's revenue is forecast to decline over the next 3 years (-1.3% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FBU's Return on Equity is forecast to be low in 3 years time (7.9%).


Next Steps

Past Performance

How has Fletcher Building performed over the past 5 years?

-27.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FBU has a large one-off loss of NZ$94.0M impacting its June 30 2019 financial results.

Growing Profit Margin: FBU became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: FBU's earnings have declined by -27.8% per year over the past 5 years.

Accelerating Growth: FBU has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: FBU has become profitable in the last year, making it difficult to compare its past year earnings growth to the Basic Materials industry (-37%).


Return on Equity

High ROE: FBU's Return on Equity (6.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Fletcher Building's financial position?


Financial Position Analysis

Short Term Liabilities: FBU's short term assets (NZ$4.1B) exceed its short term liabilities (NZ$2.3B).

Long Term Liabilities: FBU's short term assets (NZ$4.1B) exceed its long term liabilities (NZ$1.2B).


Debt to Equity History and Analysis

Debt Level: FBU's debt to equity ratio (40.7%) is considered high.

Reducing Debt: FBU's debt to equity ratio has reduced from 51.6% to 40.7% over the past 5 years.

Debt Coverage: FBU's debt is not well covered by operating cash flow (9%).

Interest Coverage: FBU's interest payments on its debt are well covered by EBIT (5x coverage).


Balance Sheet

Inventory Level: FBU has a high level of physical assets or inventory.

Debt Coverage by Assets: FBU's debt is covered by short term assets (assets are 2.4x debt).


Next Steps

Dividend

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

5.71%

Current Dividend Yield


Dividend Yield vs Market

company5.7%marketbottom25%3.0%markettop25%5.7%industryaverage3.6%forecastin3Years4.8%

Current dividend yield vs market & industry

Notable Dividend: FBU's dividend (5.71%) is higher than the bottom 25% of dividend payers in the NZ market (2.98%).

High Dividend: FBU's dividend (5.71%) is in the top 25% of dividend payers in the NZ market (5.67%)


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (79.8%), FBU's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FBU's dividends in 3 years are forecast to be covered by earnings (68% payout ratio).


Next Steps

Management

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

1.8yrs

Average management tenure


CEO

Ross Taylor (57yo)

2.1yrs

Tenure

NZ$5,302,570

Compensation

Mr. Ross H. Taylor has been the Chief Executive Officer at Fletcher Building Limited since November 22, 2017. Mr. Taylor joined the Board as an Executive Director in December 2004 of Lend Lease Corp. Ltd.  ...


CEO Compensation Analysis

Compensation vs Market: Ross's total compensation ($USD3.49M) is above average for companies of similar size in the NZ market ($USD1.42M).

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


Management Age and Tenure

1.8yrs

Average Tenure

Experienced Management: FBU's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Age and Tenure

1.3yrs

Average Tenure

62yo

Average Age

Experienced Board: FBU's board of directors are not considered experienced ( 1.3 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

BuyNZ$35,368,37327 May 19
Perpetual Limited
EntityCompany
Shares7,043,676
Max PriceNZ$5.02
SellNZ$83,322,81327 May 19
Perpetual Limited
EntityCompany
Shares16,295,196
Max PriceNZ$5.11
SellNZ$1,110,12531 Jan 19
Perpetual Limited
EntityCompany
Shares239,942
Max PriceNZ$4.63
BuyNZ$49,977,87831 Jan 19
Perpetual Limited
EntityCompany
Shares10,664,673
Max PriceNZ$4.69

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 14.5%.


Management Team

  • Ross Taylor (57yo)

    Chief Executive Officer

    • Tenure: 2.1yrs
    • Compensation: NZ$5.30m
  • Steve Evans

    Chief Executive of Residential & Development

    • Tenure: 4.9yrs
  • Dean Fradgley

    Chief Executive of Australian Division

    • Tenure: 4.3yrs
  • Bevan McKenzie

    Chief Financial Officer

    • Tenure: 3.1yrs
  • Leela Gantman

    Head of Communications

    • Tenure: 0yrs
  • Claire Carroll

    Chief People & Communications Officer

    • Tenure: 1.4yrs
  • Wendi Croft

    Chief Health & Safety Officer

    • Tenure: 1.4yrs
  • Ian Jones

    Chief Executive of Concrete Division

    • Tenure: 1.4yrs
  • Aleida White

    Head of Investor Relations

    • Tenure: 0yrs
  • David Moss

    Chief Information Officer

    • Tenure: 0.3yrs

Board Members

  • Steve Vamos (61yo)

    Independent Non-Executive Director

    • Tenure: 4.4yrs
    • Compensation: NZ$181.30k
  • Peter Crowley

    Independent Non-Executive Director

    • Tenure: 0.2yrs
  • Rob McDonald

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: NZ$157.24k
  • Martin Brydon (63yo)

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: NZ$153.10k
  • Barbara Chapman (59yo)

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: NZ$146.66k
  • Bruce Hassall

    Independent Non-Executive Chairman

    • Tenure: 1.3yrs
    • Compensation: NZ$333.42k
  • Doug McKay (64yo)

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: NZ$165.51k
  • Cathy Quinn

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: NZ$153.85k

Company Information

Fletcher Building Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Fletcher Building Limited
  • Ticker: FBU
  • Exchange: NZSE
  • Founded: 1909
  • Industry: Construction Materials
  • Sector: Materials
  • Market Cap: NZ$4.336b
  • Shares outstanding: 825.82m
  • Website: https://fletcherbuilding.com

Number of Employees


Location

  • Fletcher Building Limited
  • 810 Great South Road
  • Penrose
  • Auckland
  • 1061
  • New Zealand

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FBUNZSE (New Zealand Stock Exchange)YesOrdinary SharesNZNZDMar 2001
FBUASX (Australian Securities Exchange)YesOrdinary SharesAUAUDMar 2001
FRCE.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMar 2001
FLQDB (Deutsche Boerse AG)YesOrdinary SharesDEEURMar 2001
FBUCHIA (Chi-X Australia)YesOrdinary SharesAUAUDMar 2001
FCRE.YOTCPK (Pink Sheets LLC)SPONS ADR NEWUSUSDNov 2010

Biography

Fletcher Building Limited, together with its subsidiaries, manufactures and distributes building products in New Zealand, Australia, North America, Asia, Europe, and internationally. It operates through Bu ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/14 10:31
End of Day Share Price2019/12/13 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.