Mears Group Plc (MER) AI Stock Analysis

• Market Cap: £303.46M
• Dividend Yield: 4.64%
• Average Volume (3M): 162.47K
• Price to Earnings (P/E): 6.3
• Beta (1Y): 0.42
• Revenue Growth: -2.79%
• EPS Growth: 37.33%
• Country: UK
• Employees: 5,500
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Personal Products & Services
• EPS (TTM): 0.28
• Shares Outstanding: 86,474,625
• 10 Day Avg. Volume: 185,388
• 30 Day Avg. Volume: 162,471
• PEG Ratio: 0.11
• Price to Book (P/B): 1.73
• Price to Sales (P/S): 0.28
• P/FCF Ratio: 3.55
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £478.50
• Price Target Upside: 31.82% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: 399.00p ▲(9.92% Upside)

Mears Group Plc shows strong financial performance with solid growth and profitability, although high leverage is a concern. The stock's valuation is attractive with a low P/E ratio and high dividend yield. The recent acquisition is a positive strategic move, enhancing growth prospects. Technical indicators suggest stable market conditions.

Positive Factors

Revenue Growth

Consistent revenue growth indicates a robust business model and strong market demand, supporting long-term financial health.

Cash Generation

Strong cash generation enhances financial flexibility, enabling strategic investments and debt management, supporting sustainable growth.

Profitability

Improved profitability through efficient cost management strengthens the company's competitive position and financial resilience.

Negative Factors

High Leverage

High leverage can strain financial resources and limit strategic flexibility, posing a risk to long-term stability if not managed.

Free Cash Flow Decline

A decline in free cash flow may impact the ability to fund operations and investments, necessitating careful capital management.

EBIT Margin

Lower EBIT margin indicates potential inefficiencies, highlighting the need for operational enhancements to boost profitability.

Mears Group Plc Business Overview & Revenue Model

Company Description

Mears Group plc, through its subsidiaries, provides a range of outsourced services to the public and private sectors in the United Kingdom. It offers rapid-response and planned maintenance services to local authorities; gas and repair services; and maintenance and repairs, capital works, energy investment, and regeneration solutions for public buildings, as well as grounds maintenance services. The company also provides housing management services, which include supply of affordable homes to public and private sectors, emergency and temporary accommodation services, affordable housing services, housing with care services, and housing services to government departments. In addition, it offers house building services; and facilities management services to the public and private sectors, including defense estates, education, healthcare, public buildings, and commercial office accommodation. The company was founded in 1988 and is headquartered in Gloucester, the United Kingdom.

How the Company Makes Money

Mears Group Plc generates revenue through various streams primarily based on contracts with local authorities and housing associations. The housing management segment contributes significantly to its earnings by providing property maintenance and management services, often secured through long-term contracts. In addition, the care services division generates income by delivering support and care solutions to individuals in need, funded through public sector contracts and private pay arrangements. Mears also benefits from partnerships with local government bodies and other organizations, which can enhance its service offerings and expand its market reach. Overall, the company's revenue model is centered around delivering high-quality services that meet the needs of its clients while ensuring operational efficiency.

Mears Group Plc Financial Statement Overview

Summary

Mears Group Plc demonstrates solid growth and profitability in its income statement, supported by strong cash generation. However, the high leverage indicated in the balance sheet poses a potential risk. Overall, the company is performing well but needs to address its debt levels to enhance financial stability.

Income Statement

The company has shown consistent revenue growth, with a strong revenue increase of 4% from 2023 to 2024. The gross profit margin improved to 22.16% in 2024, indicating efficient cost management. The net profit margin also increased to 4.11%, reflecting enhanced profitability. However, the EBIT margin of 6.43% and EBITDA margin of 13.08% suggest there is room for further operational improvement.

Balance Sheet

The debt-to-equity ratio remains elevated at 1.62, indicating high leverage, which could pose a risk if not managed carefully. Conversely, the equity ratio stands at a stable 26.25%, and the return on equity improved to 25.27% in 2024, suggesting effective use of shareholder capital.

Cash Flow

Operating cash flow to net income ratio is robust at 2.57, highlighting strong cash generation relative to profits. The free cash flow to net income ratio is also strong at 1.93, indicating efficient cash management. However, free cash flow decreased by 18.49% from 2023 to 2024, suggesting a need to monitor capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.11B	1.13B	1.09B	959.61M	878.42M	805.82M
Gross Profit	249.38M	251.01M	218.77M	195.69M	180.49M	156.29M
EBITDA	151.53M	148.15M	117.70M	96.19M	82.65M	52.95M
Net Income	47.55M	46.53M	35.20M	28.31M	14.12M	44.52M
Balance Sheet
Total Assets	734.31M	701.35M	700.01M	630.87M	633.92M	676.09M
Cash, Cash Equivalents and Short-Term Investments	81.14M	91.40M	145.85M	100.10M	54.63M	96.22M
Total Debt	299.97M	297.50M	291.14M	225.42M	216.89M	248.42M
Total Liabilities	546.62M	513.88M	499.55M	417.04M	432.88M	520.04M
Stockholders Equity	184.46M	184.11M	197.51M	212.33M	200.24M	155.39M
Cash Flow
Free Cash Flow	83.23M	89.76M	110.05M	101.52M	47.90M	99.01M
Operating Cash Flow	120.14M	119.58M	135.89M	110.93M	56.67M	105.79M
Investing Cash Flow	-21.59M	-3.56M	-25.65M	-5.91M	-6.20M	52.56M
Financing Cash Flow	-119.16M	-147.14M	-95.08M	-61.52M	-92.06M	-135.19M

Mears Group Plc Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 363.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:MER, the sentiment is Positive. The current price of 363 is below the 20-day moving average (MA) of 363.38, above the 50-day MA of 355.34, and above the 200-day MA of 361.40, indicating a neutral trend. The MACD of 3.70 indicates Positive momentum. The RSI at 51.69 is Neutral, neither overbought nor oversold. The STOCH value of 13.66 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:MER.

Mears Group Plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MER	75 Outperform	£303.46M	6.30	25.63%	4.64%	-2.79%	37.33%
GLE	72 Outperform	£236.42M	14.94	5.23%	2.46%	5.93%	-18.20%
DFS	68 Neutral	£400.24M	16.32	10.06%	―	4.38%	―
WIX	67 Neutral	£529.64M	24.95	15.65%	3.83%	3.98%	-22.94%
HFD	67 Neutral	£303.72M	-9.06	-6.44%	6.28%	3.31%	-340.97%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
CRST	42 Neutral	£347.62M	-4.78	-9.56%	1.82%	-3.50%	-176.18%

Mears Group Plc Corporate Events

Mears Group Expands Compliance Services with Pennington Choices Acquisition

Mears Group PLC has acquired Pennington Choices Group Limited for £9.5 million, aiming to enhance its Compliance and Asset Management services. This acquisition aligns with Mears’ strategy to expand in the fragmented housing compliance market, leveraging Pennington Choices’ expertise to strengthen its service offerings and accelerate growth. The acquisition is expected to be earnings accretive in its first year, with anticipated revenue and adjusted EBITDA of £17.0 million and £1.5 million, respectively.