MNDI Stock Overview
Mondi plc engages in the manufacture and sale of packaging and paper products in Africa, Western Europe, Emerging Europe, North America, South America, Asia, and Australia.
I am currently Short selling this stock because of several reasons though they are also some good facts about the company. As TradeFollower my technical analysis and trading system logic forced me to rule my emotions,and that was a very good decision as you can see. Nevertheless this is my personal opinion and the following technical and fundamental analysis is just educatable. Always use stop and proper money and risk management.
REWARDS
Price-To-Earnings ratio (6x) is below the UK market (14.3x)
Earnings grew by 118.4% over the past year
Trading at good value compared to peers and industry
RISK ANALYSIS
Earnings are forecast to decline by an average of 18.7% per year for the next 3 years
Unstable dividend track record
Large one-off items impacting financial results
Price-To-Earnings vs Peers: MNDI is good value based on its Price-To-Earnings Ratio (6x) compared to the peer average (15.2x).
Price to Earnings Ratio vs Industry
How does MNDI's PE Ratio compare vs other companies in the European Forestry Industry?
Price-To-Earnings vs Industry: MNDI is good value based on its Price-To-Earnings Ratio (6x) compared to the European Forestry industry average (6.7x)
Price to Earnings Ratio vs Fair Ratio
What is MNDI's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
Price-To-Earnings vs Fair Ratio: MNDI is good value based on its Price-To-Earnings Ratio (6x) compared to the estimated Fair Price-To-Earnings Ratio (7x).
Share Price vs Fair Value
What is the Fair Price of MNDI when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: MNDI (£12.43) is trading above our estimate of fair value (£8.2)
Significantly Below Fair Value: MNDI is trading above our estimate of fair value.
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
Mondi plc engages in the manufacture and sale of packaging and paper products in Africa, Western Europe, Emerging Europe, North America, South America, Asia, and Australia.
I am currently Short selling this stock because of several reasons though they are also some good facts about the company. As TradeFollower my technical analysis and trading system logic forced me to rule my emotions,and that was a very good decision as you can see. Nevertheless this is my personal opinion and the following technical and fundamental analysis is just educatable. Always use stop and proper money and risk management.
REWARDS
Price-To-Earnings ratio (6x) is below the UK market (14.3x)
Earnings grew by 118.4% over the past year
Trading at good value compared to peers and industry
RISK ANALYSIS
Earnings are forecast to decline by an average of 18.7% per year for the next 3 years
Unstable dividend track record
Large one-off items impacting financial results
Price-To-Earnings vs Peers: MNDI is good value based on its Price-To-Earnings Ratio (6x) compared to the peer average (15.2x).
Price to Earnings Ratio vs Industry
How does MNDI's PE Ratio compare vs other companies in the European Forestry Industry?
Price-To-Earnings vs Industry: MNDI is good value based on its Price-To-Earnings Ratio (6x) compared to the European Forestry industry average (6.7x)
Price to Earnings Ratio vs Fair Ratio
What is MNDI's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
Price-To-Earnings vs Fair Ratio: MNDI is good value based on its Price-To-Earnings Ratio (6x) compared to the estimated Fair Price-To-Earnings Ratio (7x).
Share Price vs Fair Value
What is the Fair Price of MNDI when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: MNDI (£12.43) is trading above our estimate of fair value (£8.2)
Significantly Below Fair Value: MNDI is trading above our estimate of fair value.
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
Comment:
Mar 06
Group CEO & Executive Director exercised options and sold UK£609k worth of stock
On the 2nd of March, Andrew Charles King exercised options to acquire 43k shares at no cost and sold these for an average price of UK£14.17 per share. This trade did not impact their existing holding.
For the year to December 2016, Andrew Charles' total compensation was 28% salary and 72% other compensation.
This indicates that these sales could comprise a meaningful part of their income for the year.
Since March 2022, Andrew Charles has owned 156.85k shares directly.
Company insiders have collectively sold UK£1.3m more than they bought, via options and on-market transactions in the last 12 months.
Group CEO & Executive Director exercised options and sold UK£609k worth of stock
On the 2nd of March, Andrew Charles King exercised options to acquire 43k shares at no cost and sold these for an average price of UK£14.17 per share. This trade did not impact their existing holding.
For the year to December 2016, Andrew Charles' total compensation was 28% salary and 72% other compensation.
This indicates that these sales could comprise a meaningful part of their income for the year.
Since March 2022, Andrew Charles has owned 156.85k shares directly.
Company insiders have collectively sold UK£1.3m more than they bought, via options and on-market transactions in the last 12 months.
Comment:
March 20, 2023
We Think Mondi (LON:MNDI) Can Stay On Top Of Its Debt
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Mondi plc (LON:MNDI) makes use of debt. But is this debt a concern to shareholders?
When Is Debt Dangerous?
Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.
See our latest analysis for Mondi
What Is Mondi's Net Debt?
As you can see below, Mondi had €1.94b of debt, at December 2022, which is about the same as the year before. You can click the chart for greater detail. However, it also had €1.07b in cash, and so its net debt is €873.0m.
We Think Mondi (LON:MNDI) Can Stay On Top Of Its Debt
Warren Buffett famously said, 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. As with many other companies Mondi plc (LON:MNDI) makes use of debt. But is this debt a concern to shareholders?
When Is Debt Dangerous?
Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.
See our latest analysis for Mondi
What Is Mondi's Net Debt?
As you can see below, Mondi had €1.94b of debt, at December 2022, which is about the same as the year before. You can click the chart for greater detail. However, it also had €1.07b in cash, and so its net debt is €873.0m.
Comment:
A Look At Mondi's Liabilities
According to the last reported balance sheet, Mondi had liabilities of €2.12b due within 12 months, and liabilities of €2.47b due beyond 12 months. On the other hand, it had cash of €1.07b and €1.46b worth of receivables due within a year. So its liabilities total €2.07b more than the combination of its cash and short-term receivables.
While this might seem like a lot, it is not so bad since Mondi has a market capitalization of €7.01b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution.
We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
Mondi's net debt is only 0.48 times its EBITDA. And its EBIT easily covers its interest expense, being 10.9 times the size. So you could argue it is no more threatened by its debt than an elephant is by a mouse. In addition to that, we're happy to report that Mondi has boosted its EBIT by 35%, thus reducing the spectre of future debt repayments. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Mondi's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. During the last three years, Mondi produced sturdy free cash flow equating to 60% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.
According to the last reported balance sheet, Mondi had liabilities of €2.12b due within 12 months, and liabilities of €2.47b due beyond 12 months. On the other hand, it had cash of €1.07b and €1.46b worth of receivables due within a year. So its liabilities total €2.07b more than the combination of its cash and short-term receivables.
While this might seem like a lot, it is not so bad since Mondi has a market capitalization of €7.01b, and so it could probably strengthen its balance sheet by raising capital if it needed to. But it's clear that we should definitely closely examine whether it can manage its debt without dilution.
We use two main ratios to inform us about debt levels relative to earnings. The first is net debt divided by earnings before interest, tax, depreciation, and amortization (EBITDA), while the second is how many times its earnings before interest and tax (EBIT) covers its interest expense (or its interest cover, for short). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.
Mondi's net debt is only 0.48 times its EBITDA. And its EBIT easily covers its interest expense, being 10.9 times the size. So you could argue it is no more threatened by its debt than an elephant is by a mouse. In addition to that, we're happy to report that Mondi has boosted its EBIT by 35%, thus reducing the spectre of future debt repayments. The balance sheet is clearly the area to focus on when you are analysing debt. But it is future earnings, more than anything, that will determine Mondi's ability to maintain a healthy balance sheet going forward. So if you're focused on the future you can check out this free report showing analyst profit forecasts.
Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. During the last three years, Mondi produced sturdy free cash flow equating to 60% of its EBIT, about what we'd expect. This cold hard cash means it can reduce its debt when it wants to.
Comment:
May 01, 2023
Are Mondi plc (LON:MNDI) Investors Paying Above The Intrinsic Value?
Key Insights
The projected fair value for Mondi is UK£9.44 based on 2 Stage Free Cash Flow to Equity
Current share price of UK£12.65 suggests Mondi is potentially 34% overvalued
Analyst price target for MNDI is €15.31, which is 62% above our fair value estimate
Today we will run through one way of estimating the intrinsic value of Mondi plc (LON:MNDI) by taking the expected future cash flows and discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple!
The Method
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. 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.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:
10-year free cash flow (FCF) estimate
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Levered FCF (€, Millions) €447.5m €353.0m €484.7m €533.5m €584.0m €620.0m €648.9m €672.4m €691.7m €708.0m
Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x3 Analyst x2 Analyst x1 Est @ 6.17% Est @ 4.66% Est @ 3.61% Est @ 2.87% Est @ 2.36%
Present Value (€, Millions) Discounted @ 12% €400 €282 €346 €340
Are Mondi plc (LON:MNDI) Investors Paying Above The Intrinsic Value?
Key Insights
The projected fair value for Mondi is UK£9.44 based on 2 Stage Free Cash Flow to Equity
Current share price of UK£12.65 suggests Mondi is potentially 34% overvalued
Analyst price target for MNDI is €15.31, which is 62% above our fair value estimate
Today we will run through one way of estimating the intrinsic value of Mondi plc (LON:MNDI) by taking the expected future cash flows and discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple!
The Method
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. 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.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:
10-year free cash flow (FCF) estimate
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Levered FCF (€, Millions) €447.5m €353.0m €484.7m €533.5m €584.0m €620.0m €648.9m €672.4m €691.7m €708.0m
Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x3 Analyst x2 Analyst x1 Est @ 6.17% Est @ 4.66% Est @ 3.61% Est @ 2.87% Est @ 2.36%
Present Value (€, Millions) Discounted @ 12% €400 €282 €346 €340
Comment:
May 19, 2023
Mondi (LON:MNDI) Hasn't Managed To Accelerate Its Returns
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LSE:MNDISource: Shutterstock
If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return.
Understanding Return On Capital Employed (ROCE)
For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Mondi:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.14 = €1.3b ÷ (€11b - €2.1b) (Based on the trailing twelve months to December 2022).
Thus, Mondi has an ROCE of 14%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Forestry industry average of 12%.
Mondi (LON:MNDI) Hasn't Managed To Accelerate Its Returns
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LSE:MNDISource: Shutterstock
If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return.
Understanding Return On Capital Employed (ROCE)
For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. Analysts use this formula to calculate it for Mondi:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.14 = €1.3b ÷ (€11b - €2.1b) (Based on the trailing twelve months to December 2022).
Thus, Mondi has an ROCE of 14%. In absolute terms, that's a pretty normal return, and it's somewhat close to the Forestry industry average of 12%.
Comment:
The Bottom Line
The main thing to remember is that Mondi has proven its ability to continually reinvest at respectable rates of return. However, despite the favorable fundamentals, the stock has fallen 27% over the last five years, so there might be an opportunity here for astute investors. For that reason, savvy investors might want to look further into this company in case it's a prime investment.
Mondi does have some risks, we noticed 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
Earnings are forecast to decline by an average of 18.7% per year for the next 3 years
Unstable dividend track record
Large one-off items impacting financial results
The main thing to remember is that Mondi has proven its ability to continually reinvest at respectable rates of return. However, despite the favorable fundamentals, the stock has fallen 27% over the last five years, so there might be an opportunity here for astute investors. For that reason, savvy investors might want to look further into this company in case it's a prime investment.
Mondi does have some risks, we noticed 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
Earnings are forecast to decline by an average of 18.7% per year for the next 3 years
Unstable dividend track record
Large one-off items impacting financial results
Key Insights
The projected fair value for Mondi is UK£9.44 based on 2 Stage Free Cash Flow to Equity
Current share price of UK£12.65 suggests Mondi is potentially 34% overvalued
Analyst price target for MNDI is €15.31, which is 62% above our fair value estimate