NZSE:MEL

Stock Analysis Report

NOT FOR DISTRIBUTION
Header cover image

Executive Summary

Meridian Energy Limited engages in the generation, trading, and retail of electricity and gas. More Details


Snowflake Analysis

Adequate balance sheet with questionable track record.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-4.3%

MEL

-1.0%

NZ Renewable Energy

-1.5%

NZ Market


1 Year Return

17.3%

MEL

13.5%

NZ Renewable Energy

6.0%

NZ Market

Return vs Industry: MEL exceeded the NZ Renewable Energy industry which returned 13.5% over the past year.

Return vs Market: MEL exceeded the NZ Market which returned 6% over the past year.


Shareholder returns

MELIndustryMarket
7 Day-4.3%-1.0%-1.5%
30 Day7.1%7.4%4.0%
90 Day9.1%7.2%4.8%
1 Year23.2%17.3%20.4%13.5%10.3%6.0%
3 Year120.6%86.6%81.9%57.0%44.7%25.7%
5 Year211.1%140.9%126.6%88.6%95.1%47.4%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Meridian Energy undervalued compared to its fair value and its price relative to the market?

77.18x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: MEL (NZ$5.3) is trading above our estimate of fair value (NZ$3.26)

Significantly Below Fair Value: MEL is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: MEL is poor value based on its PE Ratio (77.2x) compared to the XO Renewable Energy industry average (27.1x).

PE vs Market: MEL is poor value based on its PE Ratio (77.2x) compared to the NZ market (23x).


Price to Earnings Growth Ratio

PEG Ratio: MEL is poor value based on its PEG Ratio (15.7x)


Price to Book Ratio

PB vs Industry: MEL is overvalued based on its PB Ratio (2.7x) compared to the XO Renewable Energy industry average (1.1x).


Next Steps

Future Growth

How is Meridian Energy forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

4.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MEL's forecast earnings growth (4.9% per year) is above the savings rate (2.6%).

Earnings vs Market: MEL's earnings (4.9% per year) are forecast to grow slower than the NZ market (11.2% per year).

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

Revenue vs Market: MEL's revenue is expected to decline over the next 3 years (-5.4% per year).

High Growth Revenue: MEL's revenue is forecast to decline over the next 3 years (-5.4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MEL's Return on Equity is forecast to be low in 3 years time (4.7%).


Next Steps

Past Performance

How has Meridian Energy performed over the past 5 years?

7.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MEL has high quality earnings.

Growing Profit Margin: MEL's current net profit margins (5.2%) are lower than last year (9.7%).


Past Earnings Growth Analysis

Earnings Trend: MEL's earnings have grown by 7.5% per year over the past 5 years.

Accelerating Growth: MEL's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: MEL had negative earnings growth (-48.1%) over the past year, making it difficult to compare to the Renewable Energy industry average (-48.1%).


Return on Equity

High ROE: MEL's Return on Equity (3.5%) is considered low.


Next Steps

Financial Health

How is Meridian Energy's financial position?


Financial Position Analysis

Short Term Liabilities: MEL's short term assets (NZ$665.0M) exceed its short term liabilities (NZ$648.0M).

Long Term Liabilities: MEL's short term assets (NZ$665.0M) do not cover its long term liabilities (NZ$3.9B).


Debt to Equity History and Analysis

Debt Level: MEL's debt to equity ratio (33.2%) is considered satisfactory.

Reducing Debt: MEL's debt to equity ratio has increased from 22.7% to 33.2% over the past 5 years.

Debt Coverage: MEL's debt is well covered by operating cash flow (35.8%).

Interest Coverage: MEL's interest payments on its debt are well covered by EBIT (3.3x coverage).


Balance Sheet


Next Steps

Dividend

What is Meridian Energy current dividend yield, its reliability and sustainability?

3.19%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: MEL's dividend (3.19%) is higher than the bottom 25% of dividend payers in the NZ market (2.75%).

High Dividend: MEL's dividend (3.19%) is low compared to the top 25% of dividend payers in the NZ market (4.5%).


Stability and Growth of Payments

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

Growing Dividend: MEL's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (246.1%), MEL's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MEL's dividends in 3 years are not forecast to be well covered by earnings (263.3% payout ratio).


Next Steps

Management

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

1.4yrs

Average management tenure


CEO

Neal Barclay

2.75yrs

Tenure

NZ$2,039,841

Compensation

Mr. Neal Barclay has been Chief Executive Officer of Meridian Energy Limited since January 1, 2018. Mr. Barclay served as General Manager of Retail at Meridian Energy Limited since April 5, 2016 until July ...


CEO Compensation Analysis

Compensation vs Market: Neal's total compensation ($USD1.35M) is about average for companies of similar size in the NZ market ($USD1.34M).

Compensation vs Earnings: Neal's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Neal Barclay
Chief Executive Officer2.75yrsNZ$2.04m0.017%
NZ$ 2.4m
Mike Roan
CFO and GM of Finance & Strategy1.5yrsno data0.0085%
NZ$ 1.2m
Owen Hackston
Investor Relations Managerno datano datano data
Jason Stein
Chief Executive of Meridian Energy Australia & Powershop Australia10.75yrsno data0.0098%
NZ$ 1.3m
Jason Woolley
General Counsel & Company Secretaryno datano datano data
Claire Shaw
General Manager of Corporate Affairs & Sustainabilityno datano datano data
Tania Palmer
Chief People Officer1.33yrsno datano data
Lisa Hannifin
Chief Customer Officer0.92yrno data0.00012%
NZ$ 16.3k
Nic Kennedy
Chief Executive Officer Of Flux Federation1.33yrsno datano data

1.4yrs

Average Tenure

Experienced Management: MEL's management team is not considered experienced ( 1.4 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Peter Wilson
Independent Deputy Chairman of the Board9.42yrsNZ$162.99k0.0039%
NZ$ 524.5k
Mark Verbiest
Independent Chairman of the Board1yrNZ$176.04k0.0014%
NZ$ 185.7k
Mark Cairns
Independent Director8.25yrsNZ$121.73k0.0092%
NZ$ 1.2m
Janice Dawson
Independent Director7.92yrsNZ$132.66k0.0020%
NZ$ 271.0k
Anake Angus Goodall
Independent Director9.42yrsNZ$119.20k0.0023%
NZ$ 317.1k
Julia Hoare
Independent Director1.08yrsNZ$99.89kno data
Michelle Henderson
Independent Director1yrNZ$88.03kno data
Nagaja Sanatkumar
Independent Director0.75yrNZ$59.55k0.00015%
NZ$ 20.3k

4.5yrs

Average Tenure

66yo

Average Age

Experienced Board: MEL's board of directors are considered experienced (4.5 years average tenure).


Ownership

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


Insider Trading Volume

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


Ownership Breakdown

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


Top Shareholders

Company Information

Meridian Energy Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Meridian Energy Limited
  • Ticker: MEL
  • Exchange: NZSE
  • Founded:
  • Industry: Renewable Electricity
  • Sector: Utilities
  • Market Cap: NZ$13.552b
  • Shares outstanding: 2.56b
  • Website: https://www.meridianenergy.co.nz

Number of Employees


Location

  • Meridian Energy Limited
  • 55 Lady Elizabeth Lane
  • Level 2
  • Wellington
  • 6011
  • New Zealand

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MELNZSE (New Zealand Stock Exchange)YesOrdinary SharesNZNZDOct 2013
MEZASX (Australian Securities Exchange)YesOrdinary SharesAUAUDOct 2013
15M1DB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2013
MEZCHIA (Chi-X Australia)YesOrdinary SharesAUAUDOct 2013
MDDN.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 2013

Biography

Meridian Energy Limited engages in the generation, trading, and retail of electricity and gas. The company generates electricity through hydro power stations and wind farms located in New Zealand and Austr ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/10/30 05:30
End of Day Share Price2020/10/30 00:00
Earnings2020/06/30
Annual Earnings2020/06/30


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.