| Johnson Matthey PLC (GB00BZ4BQC70) | |||
18,31 GBXStand (close): 04.07.25 |
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| 17.04.25 06:31:36 | UK Dividend Stocks Spotlight With 3 Prime Picks |  |
| As the UK's FTSE 100 index experiences fluctuations influenced by global economic challenges, notably from China's sluggish recovery efforts, investors are increasingly looking to dividend stocks for stability and income. In such an uncertain market environment, a good dividend stock typically offers consistent payouts and resilience against broader economic pressures, making them appealing options for those seeking reliable returns amidst volatility. Top 10 Dividend Stocks In The United Kingdom Name Dividend Yield Dividend Rating WPP (LSE:WPP) 7.23% ★★★★★★ Man Group (LSE:EMG) 8.16% ★★★★★☆ Treatt (LSE:TET) 3.83% ★★★★★☆ Keller Group (LSE:KLR) 3.48% ★★★★★☆ 4imprint Group (LSE:FOUR) 5.95% ★★★★★☆ Big Yellow Group (LSE:BYG) 4.71% ★★★★★☆ Grafton Group (LSE:GFTU) 4.08% ★★★★★☆ OSB Group (LSE:OSB) 7.78% ★★★★★☆ NWF Group (AIM:NWF) 4.75% ★★★★★☆ James Latham (AIM:LTHM) 7.63% ★★★★★☆ Click here to see the full list of 65 stocks from our Top UK Dividend Stocks screener. Let's dive into some prime choices out of the screener. Brooks Macdonald Group Simply Wall St Dividend Rating: ★★★★☆☆ Overview: Brooks Macdonald Group plc offers investment and wealth management services to private clients, pension funds, professional intermediaries, and trustees in the UK and Channel Islands, with a market cap of £231.69 million. Operations: Brooks Macdonald Group plc generates revenue through its subsidiaries by providing a diverse array of financial services, including investment and wealth management, to various clients such as private individuals, pension funds, professional intermediaries, and trustees across the UK and Channel Islands. Dividend Yield: 5.3% Brooks Macdonald Group's recent earnings report shows improved net income, but profit margins have decreased significantly. Despite a history of reliable and stable dividend growth over the past decade, the current high payout ratio of 187.5% suggests dividends are not well covered by earnings, though cash flows provide some support with a 50% cash payout ratio. The company has initiated a share buyback program to potentially enhance earnings per share further. Take a closer look at Brooks Macdonald Group's potential here in our dividend report. According our valuation report, there's an indication that Brooks Macdonald Group's share price might be on the cheaper side.LSE:BRK Dividend History as at Apr 2025 Foresight Group Holdings Simply Wall St Dividend Rating: ★★★★☆☆ Overview: Foresight Group Holdings Limited is an infrastructure and private equity manager operating in the United Kingdom, Italy, Luxembourg, Ireland, Spain, and Australia with a market cap of £385.22 million. Story Continues Operations: Foresight Group Holdings Limited generates revenue through its segments: Infrastructure (£87.79 million), Private Equity (£50.78 million), and Foresight Capital Management (£8.10 million). Dividend Yield: 6.7% Foresight Group Holdings offers an attractive dividend yield of 6.74%, placing it among the top UK dividend payers. While dividends have been stable and growing, they have only been paid for four years. The payout ratios—86.6% from earnings and 68.1% from cash flows—indicate sustainability, though one-off items affect earnings quality. Trading at a significant discount to estimated fair value, Foresight's recent expansion in its buyback plan could further support shareholder returns. Delve into the full analysis dividend report here for a deeper understanding of Foresight Group Holdings. Upon reviewing our latest valuation report, Foresight Group Holdings' share price might be too pessimistic.LSE:FSG Dividend History as at Apr 2025 Johnson Matthey Simply Wall St Dividend Rating: ★★★★☆☆ Overview: Johnson Matthey Plc operates in clean air, catalyst and hydrogen technology, and platinum group metals services across various international markets with a market cap of £2.01 billion. Operations: Johnson Matthey Plc's revenue is derived from its Clean Air segment (£4.47 billion), PGM Services (£8.36 billion), Value Businesses (£224 million), Catalyst Technologies (£689 million), and Hydrogen Technologies (£65 million). Dividend Yield: 6.4% Johnson Matthey's dividend yield of 6.42% ranks among the top UK payers, yet its sustainability is questionable due to inadequate free cash flow coverage. Recent board changes, including Richard Pike as CFO Designate, aim to enhance financial leadership and cost efficiency. An Investment Committee was also established to optimize capital allocation and shareholder returns. Despite trading below estimated fair value and past earnings growth, dividends have been volatile over the last decade. Click to explore a detailed breakdown of our findings in Johnson Matthey's dividend report. Our valuation report unveils the possibility Johnson Matthey's shares may be trading at a discount.LSE:JMAT Dividend History as at Apr 2025 Summing It All Up Click through to start exploring the rest of the 62 Top UK Dividend Stocks now. Hold shares in these firms? Setup your portfolio in Simply Wall St to seamlessly track your investments and receive personalized updates on your portfolio's performance. Streamline your investment strategy with Simply Wall St's app for free and benefit from extensive research on stocks across all corners of the world. Seeking Other Investments? Explore high-performing small cap companies that haven't yet garnered significant analyst attention. Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management. Find companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LSE:BRK LSE:FSG and LSE:JMAT. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View Comments |
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| 17.03.25 07:13:41 | Investors in Johnson Matthey (LON:JMAT) have unfortunately lost 15% over the last three years | |
| In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Johnson Matthey Plc (LON:JMAT) shareholders, since the share price is down 25% in the last three years, falling well short of the market return of around 18%. Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns. View our latest analysis for Johnson Matthey In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. Although the share price is down over three years, Johnson Matthey actually managed to grow EPS by 61% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed. It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price. Given the healthiness of the dividend payments, we doubt that they've concerned the market. On the other hand, the uninspired reduction in revenue, at 11% each year, may have shareholders ditching the stock. This could have some investors worried about the longer term growth potential (or lack thereof). The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).LSE:JMAT Earnings and Revenue Growth March 17th 2025 We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Johnson Matthey will earn in the future (free profit forecasts). What About Dividends? As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Johnson Matthey's TSR for the last 3 years was -15%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return. Story Continues A Different Perspective Investors in Johnson Matthey had a tough year, with a total loss of 13% (including dividends), against a market gain of about 13%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 1.7% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Johnson Matthey is showing 3 warning signs in our investment analysis, and 1 of those is a bit unpleasant... If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: most of them are flying under the radar). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 06.02.25 06:19:25 | Johnson Matthey Plc (LON:JMAT) is a favorite amongst institutional investors who own 86% | |
| Key Insights Given the large stake in the stock by institutions, Johnson Matthey's stock price might be vulnerable to their trading decisions A total of 12 investors have a majority stake in the company with 52% ownership Insiders have bought recently To get a sense of who is truly in control of Johnson Matthey Plc (LON:JMAT), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 86% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn). Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait. In the chart below, we zoom in on the different ownership groups of Johnson Matthey. View our latest analysis for Johnson Matthey LSE:JMAT Ownership Breakdown February 6th 2025 What Does The Institutional Ownership Tell Us About Johnson Matthey? Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices. We can see that Johnson Matthey does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Johnson Matthey's historic earnings and revenue below, but keep in mind there's always more to the story.LSE:JMAT Earnings and Revenue Growth February 6th 2025 Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Johnson Matthey. BlackRock, Inc. is currently the company's largest shareholder with 10% of shares outstanding. For context, the second largest shareholder holds about 8.8% of the shares outstanding, followed by an ownership of 5.9% by the third-largest shareholder. After doing some more digging, we found that the top 12 have the combined ownership of 52% in the company, suggesting that no single shareholder has significant control over the company. Story Continues While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too. Insider Ownership Of Johnson Matthey The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances. Our data suggests that insiders own under 1% of Johnson Matthey Plc in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around UK£2.5m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling. General Public Ownership The general public, who are usually individual investors, hold a 11% stake in Johnson Matthey. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run. Next Steps: It's always worth thinking about the different groups who own shares in a company. But to understand Johnson Matthey better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Johnson Matthey (of which 1 is a bit unpleasant!) you should know about. But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 16.01.25 08:52:01 | Are Johnson Matthey Plc's (LON:JMAT) Fundamentals Good Enough to Warrant Buying Given The Stock's Recent Weakness? | |
| Johnson Matthey (LON:JMAT) has had a rough three months with its share price down 11%. However, stock prices are usually driven by a company’s financials over the long term, which in this case look pretty respectable. Particularly, we will be paying attention to Johnson Matthey's ROE today. Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. See our latest analysis for Johnson Matthey How Do You Calculate Return On Equity? ROE can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Johnson Matthey is: 22% = UK£529m ÷ UK£2.4b (Based on the trailing twelve months to September 2024). The 'return' refers to a company's earnings over the last year. That means that for every £1 worth of shareholders' equity, the company generated £0.22 in profit. What Has ROE Got To Do With Earnings Growth? Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. Johnson Matthey's Earnings Growth And 22% ROE At first glance, Johnson Matthey seems to have a decent ROE. On comparing with the average industry ROE of 7.9% the company's ROE looks pretty remarkable. Yet, Johnson Matthey has posted measly growth of 3.7% over the past five years. This is interesting as the high returns should mean that the company has the ability to generate high growth but for some reason, it hasn't been able to do so. Such a scenario is likely to take place when a company pays out a huge portion of its earnings as dividends, or is faced with competitive pressures. Next, on comparing Johnson Matthey's net income growth with the industry, we found that the company's reported growth is similar to the industry average growth rate of 3.7% over the last few years.LSE:JMAT Past Earnings Growth January 16th 2025 Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Is Johnson Matthey fairly valued compared to other companies? These 3 valuation measures might help you decide. Story Continues Is Johnson Matthey Using Its Retained Earnings Effectively? Johnson Matthey has a three-year median payout ratio of 68% (implying that it keeps only 32% of its profits), meaning that it pays out most of its profits to shareholders as dividends, and as a result, the company has seen low earnings growth. In addition, Johnson Matthey has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth. Our latest analyst data shows that the future payout ratio of the company is expected to drop to 41% over the next three years. However, Johnson Matthey's future ROE is expected to decline to 12% despite the expected decline in its payout ratio. We infer that there could be other factors that could be steering the foreseen decline in the company's ROE. Summary In total, it does look like Johnson Matthey has some positive aspects to its business. Its earnings growth is decent, and the high ROE does contribute to that growth. However, investors could have benefitted even more from the high ROE, had the company been reinvesting more of its earnings. That being so, according to the latest industry analyst forecasts, the company's earnings are expected to shrink in the future. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 20.12.24 08:03:57 | Top UK Dividend Stocks To Watch In December 2024 | |
| As the FTSE 100 index experiences fluctuations due to global economic pressures, particularly from China's sluggish recovery, investors are increasingly turning their attention to dividend stocks for potential stability and income. In such uncertain times, a strong dividend yield can be an attractive feature of a stock, offering regular income and potentially cushioning against market volatility. Top 10 Dividend Stocks In The United Kingdom Name Dividend Yield Dividend Rating Pets at Home Group (LSE:PETS) 6.14% ★★★★★★ Keller Group (LSE:KLR) 3.36% ★★★★★☆ 4imprint Group (LSE:FOUR) 3.47% ★★★★★☆ OSB Group (LSE:OSB) 8.27% ★★★★★☆ Man Group (LSE:EMG) 6.12% ★★★★★☆ Big Yellow Group (LSE:BYG) 4.79% ★★★★★☆ Dunelm Group (LSE:DNLM) 7.36% ★★★★★☆ Plus500 (LSE:PLUS) 5.95% ★★★★★☆ Grafton Group (LSE:GFTU) 3.82% ★★★★★☆ James Latham (AIM:LTHM) 6.69% ★★★★★☆ Click here to see the full list of 63 stocks from our Top UK Dividend Stocks screener. Let's dive into some prime choices out of the screener. James Latham Simply Wall St Dividend Rating: ★★★★★☆ Overview: James Latham plc, with a market cap of £235.54 million, imports and distributes timbers, panels, and decorative surfaces across the United Kingdom, Republic of Ireland, rest of Europe, and internationally. Operations: James Latham plc generates revenue of £362.22 million from its Timber Importing and Distribution segment. Dividend Yield: 6.7% James Latham's dividend yield is in the top 25% of UK payers, supported by a low payout ratio of 33.4%, indicating earnings coverage. However, a high cash payout ratio of 107% raises concerns about sustainability from free cash flows. Recent earnings show a decline with net income at £10.16 million for H1 2024, down from £12.37 million the previous year, potentially impacting future dividend reliability despite stable and growing payouts over the past decade. Unlock comprehensive insights into our analysis of James Latham stock in this dividend report. In light of our recent valuation report, it seems possible that James Latham is trading behind its estimated value.AIM:LTHM Dividend History as at Dec 2024 M.P. Evans Group Simply Wall St Dividend Rating: ★★★★☆☆ Overview: M.P. Evans Group PLC, with a market cap of £499.29 million, operates through its subsidiaries to own and develop oil palm plantations in Indonesia and Malaysia. Operations: M.P. Evans Group PLC generates its revenue primarily from its plantation operations in Indonesia, amounting to $336.59 million. Dividend Yield: 4.7% M.P. Evans Group's dividend payments have been volatile and unreliable over the past decade, despite recent growth. The dividends are well covered by both earnings and cash flows, with payout ratios of 48.9% and 33.3%, respectively, suggesting sustainability from these perspectives. However, significant insider selling in the last quarter raises caution about future prospects. Currently trading below estimated fair value by 70.1%, MPE offers good relative value compared to peers but yields lower than top UK payers at 4.66%. Story Continues Delve into the full analysis dividend report here for a deeper understanding of M.P. Evans Group. Our comprehensive valuation report raises the possibility that M.P. Evans Group is priced lower than what may be justified by its financials.AIM:MPE Dividend History as at Dec 2024 Johnson Matthey Simply Wall St Dividend Rating: ★★★★☆☆ Overview: Johnson Matthey Plc operates in clean air, catalyst and hydrogen technology, and platinum group metals services across various international markets with a market cap of £2.23 billion. Operations: Johnson Matthey Plc's revenue segments include Clean Air (£4.47 billion), PGM Services (£8.36 billion), Value Businesses (£224 million), Catalyst Technologies (£689 million), and Hydrogen Technologies (£65 million). Dividend Yield: 5.8% Johnson Matthey's dividend payments have been inconsistent over the past decade, though they increased during this period. The current yield of 5.77% ranks among the top UK payers but isn't well-supported by free cash flows despite a low payout ratio of 26.6%. Recent earnings showed significant improvement, with net income rising to £484 million for H1 2024 from £63 million a year prior. However, forecasted earnings declines and executive changes may impact future stability. Take a closer look at Johnson Matthey's potential here in our dividend report. According our valuation report, there's an indication that Johnson Matthey's share price might be on the cheaper side.LSE:JMAT Dividend History as at Dec 2024 Taking Advantage Explore the 63 names from our Top UK Dividend Stocks screener here. Got skin in the game with these stocks? Elevate how you manage them by using Simply Wall St's portfolio, where intuitive tools await to help optimize your investment outcomes. Simply Wall St is a revolutionary app designed for long-term stock investors, it's free and covers every market in the world. Seeking Other Investments? Explore high-performing small cap companies that haven't yet garnered significant analyst attention. Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management. Find companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include AIM:LTHM AIM:MPE and LSE:JMAT. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View Comments |
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| 08.10.24 05:13:07 | Investors in Johnson Matthey (LON:JMAT) have unfortunately lost 38% over the last five years | |
| The main aim of stock picking is to find the market-beating stocks. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term Johnson Matthey Plc (LON:JMAT) shareholders for doubting their decision to hold, with the stock down 48% over a half decade. So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress. View our latest analysis for Johnson Matthey There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. During the five years over which the share price declined, Johnson Matthey's earnings per share (EPS) dropped by 22% each year. This fall in the EPS is worse than the 12% compound annual share price fall. The relatively muted share price reaction might be because the market expects the business to turn around. The image below shows how EPS has tracked over time (if you click on the image you can see greater detail). earnings-per-share-growth It might be well worthwhile taking a look at our freereport on Johnson Matthey's earnings, revenue and cash flow. What About Dividends? It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Johnson Matthey the TSR over the last 5 years was -38%, which is better than the share price return mentioned above. This is largely a result of its dividend payments! A Different Perspective Johnson Matthey shareholders are up 5.4% for the year (even including dividends). But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 7% per year, over five years. It could well be that the business is stabilizing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 3 warning signs we've spotted with Johnson Matthey . For those who like to find winning investments this freelist of undervalued companies with recent insider purchasing, could be just the ticket. Story continues Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 11.08.24 07:26:40 | A Look At The Intrinsic Value Of Johnson Matthey Plc (LON:JMAT) |  |
| Key Insights The projected fair value for Johnson Matthey is UK£17.62 based on 2 Stage Free Cash Flow to Equity Johnson Matthey's UK£15.76 share price indicates it is trading at similar levels as its fair value estimate Our fair value estimate is 12% lower than Johnson Matthey's analyst price target of UK£19.96 Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Johnson Matthey Plc (LON:JMAT) as an investment opportunity by taking the expected future cash flows and discounting them to their present value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. It may sound complicated, but actually it is quite simple! We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. View our latest analysis for Johnson Matthey The Model We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 10-year free cash flow (FCF) estimate 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (£, Millions) UK£360.0m UK£185.2m UK£225.8m UK£210.3m UK£201.4m UK£196.6m UK£194.5m UK£194.2m UK£195.0m UK£196.8m Growth Rate Estimate Source Analyst x4 Analyst x3 Analyst x3 Est @ -6.86% Est @ -4.22% Est @ -2.38% Est @ -1.08% Est @ -0.18% Est @ 0.45% Est @ 0.90% Present Value (£, Millions) Discounted @ 7.7% UK£334 UK£160 UK£181 UK£156 UK£139 UK£126 UK£116 UK£107 UK£100 UK£93.7 ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF) = UK£1.5b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 1.9%. We discount the terminal cash flows to today's value at a cost of equity of 7.7%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = UK£197m× (1 + 1.9%) ÷ (7.7%– 1.9%) = UK£3.5b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£3.5b÷ ( 1 + 7.7%)10= UK£1.7b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is UK£3.2b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of UK£15.8, the company appears about fair value at a 11% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. dcf Important Assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Johnson Matthey as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.7%, which is based on a levered beta of 1.190. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. SWOT Analysis for Johnson Matthey Strength Debt is not viewed as a risk. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Chemicals market. Opportunity Annual earnings are forecast to grow faster than the British market. Current share price is below our estimate of fair value. Threat Dividends are not covered by earnings. Annual revenue is expected to decline over the next 3 years. Next Steps: Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Johnson Matthey, there are three important items you should further research: Risks: Take risks, for example - Johnson Matthey has 3 warning signs we think you should be aware of. Future Earnings: How does JMAT's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the LSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 21.07.24 07:36:02 | Does Johnson Matthey Plc's (LON:JMAT) Weak Fundamentals Mean That The Market Could Correct Its Share Price? | |
| Johnson Matthey's (LON:JMAT) stock is up by a considerable 7.5% over the past month. However, in this article, we decided to focus on its weak fundamentals, as long-term financial performance of a business is what ultimately dictates market outcomes. Particularly, we will be paying attention to Johnson Matthey's ROE today. ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital. Check out our latest analysis for Johnson Matthey How Do You Calculate Return On Equity? The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Johnson Matthey is: 4.5% = UK£108m ÷ UK£2.4b (Based on the trailing twelve months to March 2024). The 'return' is the yearly profit. Another way to think of that is that for every £1 worth of equity, the company was able to earn £0.05 in profit. Why Is ROE Important For Earnings Growth? So far, we've learned that ROE is a measure of a company's profitability. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. Johnson Matthey's Earnings Growth And 4.5% ROE On the face of it, Johnson Matthey's ROE is not much to talk about. We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 6.9%. For this reason, Johnson Matthey's five year net income decline of 15% is not surprising given its lower ROE. However, there could also be other factors causing the earnings to decline. For example, it is possible that the business has allocated capital poorly or that the company has a very high payout ratio. Next, when we compared with the industry, which has shrunk its earnings at a rate of 3.8% in the same 5-year period, we still found Johnson Matthey's performance to be quite bleak, because the company has been shrinking its earnings faster than the industry. past-earnings-growth The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. Is JMAT fairly valued? This infographic on the company's intrinsic value has everything you need to know. Story continues Is Johnson Matthey Using Its Retained Earnings Effectively? Johnson Matthey's declining earnings is not surprising given how the company is spending most of its profits in paying dividends, judging by its three-year median payout ratio of 76% (or a retention ratio of 24%). With only very little left to reinvest into the business, growth in earnings is far from likely. You can see the 3 risks we have identified for Johnson Matthey by visiting our risks dashboard for free on our platform here. In addition, Johnson Matthey has been paying dividends over a period of at least ten years suggesting that keeping up dividend payments is way more important to the management even if it comes at the cost of business growth. Existing analyst estimates suggest that the company's future payout ratio is expected to drop to 40% over the next three years. The fact that the company's ROE is expected to rise to 13% over the same period is explained by the drop in the payout ratio. Summary On the whole, Johnson Matthey's performance is quite a big let-down. Because the company is not reinvesting much into the business, and given the low ROE, it's not surprising to see the lack or absence of growth in its earnings. With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future. To know more about the company's future earnings growth forecasts take a look at this freereport on analyst forecasts for the company to find out more. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com |
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| 02.07.24 07:15:08 | Johnson Matthey Insider Ups Holding By 63% During Year | |
| Insiders were net buyers of Johnson Matthey Plc's (LON:JMAT ) stock during the past year. That is, insiders bought more stock than they sold. Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares. See our latest analysis for Johnson Matthey Johnson Matthey Insider Transactions Over The Last Year The CEO & Director Liam Condon made the biggest insider purchase in the last 12 months. That single transaction was for UK£215k worth of shares at a price of UK£17.92 each. That means that an insider was happy to buy shares at above the current price of UK£15.75. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. The only individual insider to buy over the last year was Liam Condon. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction! insider-trading-volume There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this freelist of companies. (Hint: insiders have been buying them). Insider Ownership Of Johnson Matthey Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, Johnson Matthey insiders have about 0.08% of the stock, worth approximately UK£2.2m. We prefer to see high levels of insider ownership. So What Does This Data Suggest About Johnson Matthey Insiders? There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Johnson Matthey insiders bought more shares in the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 3 warning signs for Johnson Matthey that deserve your attention before buying any shares. Story continues Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist of interesting companies. For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments |
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| 13.06.24 06:00:37 | In the wake of Johnson Matthey Plc's (LON:JMAT) latest UK£154m market cap drop, institutional owners may be forced to take severe actions | |
| Key Insights Given the large stake in the stock by institutions, Johnson Matthey's stock price might be vulnerable to their trading decisions The top 13 shareholders own 51% of the company Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company If you want to know who really controls Johnson Matthey Plc (LON:JMAT), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 84% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn). And institutional investors saw their holdings value drop by 5.2% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 3.2% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Johnson Matthey, which might have negative implications on individual investors. Let's take a closer look to see what the different types of shareholders can tell us about Johnson Matthey. Check out our latest analysis for Johnson Matthey ownership-breakdown What Does The Institutional Ownership Tell Us About Johnson Matthey? Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing. We can see that Johnson Matthey does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Johnson Matthey, (below). Of course, keep in mind that there are other factors to consider, too. earnings-and-revenue-growth Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Johnson Matthey. Schroder Investment Management Limited is currently the company's largest shareholder with 10% of shares outstanding. For context, the second largest shareholder holds about 6.7% of the shares outstanding, followed by an ownership of 4.9% by the third-largest shareholder. Story continues A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 51% implying that no single shareholder has a majority. Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. Insider Ownership Of Johnson Matthey The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it. I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions. Our most recent data indicates that insiders own less than 1% of Johnson Matthey Plc. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around UK£2.2m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying. General Public Ownership The general public-- including retail investors -- own 13% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies. Next Steps: I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Johnson Matthey , and understanding them should be part of your investment process. Ultimately the future is most important. You can access this freereport on analyst forecasts for the company. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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