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Metcash Ltd MTS

Morningstar Rating
A$3.83 −0.04 (1.03%)
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Company Report

Superior Food Group and Bolt-on Hardware Acquisitions Look Value-Neutral

Metcash dominates the Australian wholesale distribution of packaged groceries to the independent retailer. From the small corner shop to the local independent supermarket, Metcash acts as a co-operative, funneling independent sales volume through a single channel to derive buying power to negotiate volume discounts with manufacturers. Metcash is the fourth force in the grocery industry, with around 10% market share via its IGA banner network, while Woolworths and Coles combined account for about two thirds of Australian food retailing, and Aldi also commands a comparable market share of around 10%.

Price vs Fair Value

MTS is trading at a 892% premium.
Price
A$3.83
Fair Value
A$6.00
Uncertainty
Medium
1-Star Price
A$3.70
5-Star Price
A$4.20
Economic Moat
Rps
Capital Allocation
Jqycqdh

Bulls Say, Bears Say

Bulls

As the predominant supplier of packaged groceries to independent retailers, Metcash has a quasi-monopolistic market position and can maintain above-average returns on capital.

Bears

Intense competition between Coles, Woolworths, and Aldi is likely reduce sales volumes of the independent channel and could make it increasingly hard for Metcash to support its customers in matching shelf prices of the majors.

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News

Trading Information

Previous Close Price
A$3.87
Day Range
A$3.823.88
52-Week Range
A$3.414.06
Bid/Ask
A$3.81 / A$3.85
Market Cap
A$4.18 Bil
Volume/Avg
3.1 Mil / 3.2 Mil

Key Statistics

Price/Earnings (Normalized)
12.74
Price/Sales
0.24
Dividend Yield (Trailing)
5.74%
Dividend Yield (Forward)
5.74%
Total Yield
5.68%

Company Profile

Metcash is a wholesale distribution and marketing company specializing in food, liquor, and hardware. Centralized wholesale distribution enables retailers to gain access to the combined scale of many retailers to negotiate material volume discounts.The food segment distributes of a range of products and services to independent supermarket and convenience stores. The hardware segment distributes hardware products to independent retail outlets and operates company-owned stores. The liquor segment distributes liquor products to independent retailers and pubs.
Sector
Consumer Defensive
Industry
Food Distribution
Stock Style Box
Mid Value
Total Number of Employees
6,378

Competitors

Valuation

Metric
MTS
COL
WOW
Price/Earnings (Normalized)
12.7419.8522.04
Price/Book Value
3.346.157.38
Price/Sales
0.240.520.57
Price/Cash Flow
7.548.037.27
Price/Earnings
MTS
COL
WOW

Financial Strength

Metric
MTS
COL
WOW
Quick Ratio
0.630.230.22
Current Ratio
1.080.660.58
Interest Coverage
5.544.440.98
Quick Ratio
MTS
COL
WOW

Profitability

Metric
MTS
COL
WOW
Return on Assets (Normalized)
5.23%5.30%6.12%
Return on Equity (Normalized)
26.49%29.56%34.66%
Return on Invested Capital (Normalized)
13.34%10.48%9.19%
Return on Assets
MTS
COL
WOW
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