Melrose Industries PLC MRO

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GBX 627.65 −4.15 (0.66%)

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As of May 1, 2024 3:50pm Delayed Price Post-Trading: —

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Company Report

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Melrose Industries: We Initiate Coverage With a Wide Moat and Fair Value of GBX 870; Shares Undervalued

Loredana Muharremi Apr 17, 2024

We are initiating coverage of Melrose Industries with a wide moat and fair value estimate of GBX 870 per share, backed by anticipated growth in flight hours largely fueled by leisure travel and alongside a surge in defense expenditure in response to escalating global security concerns. The valuation is further bolstered by a strategic shift in product mix toward higher-margin aftermarket revenue.

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Price vs Fair Value

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MRO is trading at a 27% discount.

Price

GBX 631.80

Apr 30, 2024

Fair Value

GBX 586.00

Apr 17, 2024

Uncertainty

Medium

1-Star Price: GBX 1,754.40
5-Star Price: GBX 713.00
Economic Moat: Tzlb
Capital Allocation: Mprrjgjhb

Bulls Say, Bears Say

Bulls

Supplying 90% of the in-service global engines fleet with a strong focus on narrow-body aircraft, GKN is well positioned to capitalize on long-term structural industry growth.

Bears

Further technical issues from in-service GTF engines could hit margins and the ramp-up of production.

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News

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Melrose Flags Hit From RTX Engines Recall, Joining Others in Aerospace Sector — At a Glance

Global News Select Sep 12, 2023 11:10am

Trading Information

Previous Close Price: GBX 631.80
Day Range: GBX 618.60–637.20
52-Week Range: GBX 404.50–681.20
Bid/Ask: GBX 486.00 / GBX 645.00
Market Cap: GBX 821.64 Bil
Volume/Avg: 3.9 Mil / 5.7 Mil

Key Statistics

Price/Earnings (Normalized): 32.51
Price/Sales: 2.65
Dividend Yield (Trailing): 0.79%
Dividend Yield (Forward): 0.79%
Total Yield: 1.92%

Company Profile

Melrose Industries is a UK-based company that manufactures engines and structures products for all major OEMs across civil and defense markets. The company derives around 75% of its revenue from civil and the remaining from defense.In the civil market, the company operates in 90% of existing fleets in service and is a demonstrator partner in the GTF and CFM RISE next-generation engines for narrow-body aircraft.

Sector: Industrials
Industry: Specialty Industrial Machinery
Stock Style Box: Mid Growth
Total Number of Employees: 17,234
Website: https://www.melroseplc.net

Competitors

Valuation

Metric	MRO	MTX	SAF
Price/Earnings (Normalized)	32.51	21.24	47.95
Price/Book Value	2.36	4.23	7.29
Price/Sales	2.65	2.33	3.72
Price/Cash Flow	60.80	13.79	25.08

Price/Earnings

MRO

MTX

SAF

Financial Strength

Metric	MRO	MTX	SAF
Quick Ratio	0.49	0.77	0.62
Current Ratio	0.86	1.12	0.95
Interest Coverage	0.61	−2.42	30.78

Quick Ratio

MRO

MTX

SAF

Profitability

Metric	MRO	MTX	SAF
Return on Assets (Normalized)	2.82%	6.21%	4.18%
Return on Equity (Normalized)	5.50%	19.59%	18.59%
Return on Invested Capital (Normalized)	4.96%	15.68%	10.84%

Return on Assets

MRO

MTX

SAF

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