Since August 2023, we have believed that the market was underestimating no-moat Smartgroup’s labor intensity while overestimating its ability to grow novated leasing yields—mainly transactional revenue from facilitating novated leases for employees.
As one of the largest salary packaging and novated lease providers in Australia, Smartgroup benefits from some scale advantages. A majority of Smartgroup’s clients are in defensive industries, and the firm has long-standing relationships with many of its clients.
Smartgroup’s business can be disrupted by many external factors beyond its control. Regulation is one example, which had disrupted its commissions and rebate income streams in recent periods. Its business relies on favorable FBT concessions, which may be removed by a future Australian government.
|
Metric
|
SIQ
|
MMS
|
|---|---|---|
Price/Earnings (Normalized) | 17.22 | 17.02 |
Price/Book Value | 4.49 | 9.46 |
Price/Sales | 4.35 | 3.92 |
Price/Cash Flow | 16.28 | — |
|
Metric
|
SIQ
|
MMS
|
|---|---|---|
Quick Ratio | 0.50 | 0.35 |
Current Ratio | 0.94 | 1.19 |
Interest Coverage | 21.71 | 5.93 |
|
Metric
|
SIQ
|
MMS
|
|---|---|---|
Return on Assets (Normalized) | 15.45% | 1.81% |
Return on Equity (Normalized) | 26.47% | 11.23% |
Return on Invested Capital (Normalized) | 21.36% | 3.18% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
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