Morningstar

Metcash Ltd MTS

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Stock XASX Rating as of
A$3.53 −0.03 (0.84%)
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As of Delayed Price Closed

Company Report

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Metcash: Weak Construction Activity and Declining Tobacco Sales Are Formidable Near-Term Headwinds

Johannes Faul

While no-moat Metcash’s underlying trading performance is subdued, recent acquisitions are bolstering sales growth in the first four months of fiscal 2025. Group sales are up 6% in the fiscal year to Sept. 8 compared with the previous corresponding period. We forecast sales, excluding charge-through, to increase 14% to AUD 17.3 billion in fiscal 2025, largely owing to annualized sales of AUD 1.3 billion from the Superior Food Services acquisition in June 2024. Our sales and earnings estimates are virtually unchanged and we maintain our AUD 4 fair value estimate. Shares are moderately undervalued at current prices.

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Price vs Fair Value

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MTS is trading at a 756% premium.
Price
A$3.53
Fair Value
A$9.00
Uncertainty
Medium
1-Star Price
A$2.70
5-Star Price
A$5.40
Economic Moat
Fynhy
Capital Allocation
Kzmcnjppc

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

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Trading Information

Previous Close Price
A$3.56
Day Range
A$3.53–3.58
52-Week Range
A$3.41–4.06
Bid/Ask
A$3.53 / A$3.56
Market Cap
A$3.87 Bil
Volume/Avg
3.2 Mil / 3.3 Mil

Key Statistics

Price/Earnings (Normalized)
12.50
Price/Sales
0.22
Dividend Yield (Trailing)
5.52%
Dividend Yield (Forward)
5.52%
Total Yield
5.52%

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
Website
https://www.metcash.com

Competitors

Valuation

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Metric
MTS
WES
WOW
Price/Earnings (Normalized)
 12.5029.5822.88
Price/Book Value
 2.549.087.45
Price/Sales
 0.221.770.59
Price/Cash Flow
 7.3216.949.23
Price/Earnings
MTS
WES
WOW

Financial Strength

Metric
MTS
WES
WOW
Quick Ratio
 0.710.370.19
Current Ratio
 1.131.140.55
Interest Coverage
 4.889.851.08
Quick Ratio
MTS
WES
WOW

Profitability

Metric
MTS
WES
WOW
Return on Assets (Normalized)
 4.98%9.45%5.10%
Return on Equity (Normalized)
 22.74%30.34%30.32%
Return on Invested Capital (Normalized)
 12.67%14.33%7.66%
Return on Assets
MTS
WES
WOW

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