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Micro Focus International plc (MFGP) Stock Fundamental Analysis

NYSE:MFGP - New York Stock Exchange, Inc. - US5948374039 - ADR - Currency: USD

6.48  -0.03 (-0.46%)

After market: 6.29 -0.19 (-2.93%)

Fundamental Rating

2

Overall MFGP gets a fundamental rating of 2 out of 10. We evaluated MFGP against 283 industry peers in the Software industry. Both the profitability and financial health of MFGP have multiple concerns. MFGP has a bad growth rate and is valued cheaply.


Dividend Valuation Growth Profitability Health

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1

1. Profitability

1.1 Basic Checks

In the past year MFGP was profitable.
In the past year MFGP had a positive cash flow from operations.
MFGP Yearly Net Income VS EBIT VS OCF VS FCFMFGP Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 0 1B -1B -2B

1.2 Ratios

The profitability ratios for MFGP are negative, so there is not much use analyzing them.
Industry RankSector Rank
ROA N/A
ROE N/A
ROIC N/A
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
MFGP Yearly ROA, ROE, ROICMFGP Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 0 20 -20 -40 -60 -80

1.3 Margins

With a decent Gross Margin value of 73.32%, MFGP is doing good in the industry, outperforming 68.23% of the companies in the same industry.
MFGP's Gross Margin has declined in the last couple of years.
MFGP does not have Profit Margin and Operating Margin available, so we won't be analyzing them here.
Industry RankSector Rank
OM N/A
PM (TTM) N/A
GM 73.32%
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.3%
GM growth 5Y-3.87%
MFGP Yearly Profit, Operating, Gross MarginsMFGP Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 0 50 -50

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1

2. Health

2.1 Basic Checks

MFGP does not have a ROIC to compare to the WACC, probably because it is not profitable.
The number of shares outstanding for MFGP has been increased compared to 1 year ago.
The debt/assets ratio for MFGP is higher compared to a year ago.
MFGP Yearly Shares OutstandingMFGP Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 100M 200M 300M
MFGP Yearly Total Debt VS Total AssetsMFGP Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 5B 10B 15B

2.2 Solvency

MFGP has an Altman-Z score of 0.93. This is a bad value and indicates that MFGP is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of MFGP (0.93) is worse than 61.20% of its industry peers.
MFGP has a debt to FCF ratio of 23.67. This is a negative value and a sign of low solvency as MFGP would need 23.67 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 23.67, MFGP is doing good in the industry, outperforming 61.54% of the companies in the same industry.
A Debt/Equity ratio of 1.57 is on the high side and indicates that MFGP has dependencies on debt financing.
With a Debt to Equity ratio value of 1.57, MFGP is not doing good in the industry: 80.94% of the companies in the same industry are doing better.
Industry RankSector Rank
Debt/Equity 1.57
Debt/FCF 23.67
Altman-Z 0.93
ROIC/WACCN/A
WACC7.83%
MFGP Yearly LT Debt VS Equity VS FCFMFGP Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2B 4B 6B

2.3 Liquidity

A Current Ratio of 0.85 indicates that MFGP may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.85, MFGP is doing worse than 83.28% of the companies in the same industry.
MFGP has a Quick Ratio of 0.85. This is a bad value and indicates that MFGP is not financially healthy enough and could expect problems in meeting its short term obligations.
MFGP's Quick ratio of 0.85 is on the low side compared to the rest of the industry. MFGP is outperformed by 81.94% of its industry peers.
Industry RankSector Rank
Current Ratio 0.85
Quick Ratio 0.85
MFGP Yearly Current Assets VS Current LiabilitesMFGP Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 1B 2B 3B

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2

3. Growth

3.1 Past

The earnings per share for MFGP have decreased by -5.84% in the last year.
The earnings per share for MFGP have been decreasing by -13.83% on average. This is quite bad
Looking at the last year, MFGP shows a decrease in Revenue. The Revenue has decreased by -3.37% in the last year.
MFGP shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 18.42% yearly.
EPS 1Y (TTM)-5.84%
EPS 3Y-13.83%
EPS 5YN/A
EPS Q2Q%-13.64%
Revenue 1Y (TTM)-3.37%
Revenue growth 3Y-15.19%
Revenue growth 5Y18.42%
Sales Q2Q%-10.95%

3.2 Future

MFGP is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -8.54% yearly.
MFGP is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -5.58% yearly.
EPS Next Y-15.19%
EPS Next 2Y-13.56%
EPS Next 3Y-8.54%
EPS Next 5YN/A
Revenue Next Year-10.91%
Revenue Next 2Y-7.63%
Revenue Next 3Y-5.58%
Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
MFGP Yearly Revenue VS EstimatesMFGP Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B
MFGP Yearly EPS VS EstimatesMFGP Yearly EPS VS EstimatesYearly EPS VS Estimates 2017 2018 2019 2020 2021 2022 2023 2024 0.5 1 1.5 2

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7

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 4.63, which indicates a rather cheap valuation of MFGP.
96.99% of the companies in the same industry are more expensive than MFGP, based on the Price/Earnings ratio.
MFGP is valuated cheaply when we compare the Price/Earnings ratio to 25.82, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 6.21, the valuation of MFGP can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MFGP indicates a rather cheap valuation: MFGP is cheaper than 98.33% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.76. MFGP is valued rather cheaply when compared to this.
Industry RankSector Rank
PE 4.63
Fwd PE 6.21
MFGP Price Earnings VS Forward Price EarningsMFGP Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30 40 50

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, MFGP is valued cheaper than 96.32% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MFGP indicates a rather cheap valuation: MFGP is cheaper than 95.32% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 12.25
EV/EBITDA 5.99
MFGP Per share dataMFGP EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 5 -5 -10

4.3 Compensation for Growth

A cheap valuation may be justified as MFGP's earnings are expected to decrease with -8.54% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-13.56%
EPS Next 3Y-8.54%

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5

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 4.09%, MFGP is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 14.37, MFGP pays a better dividend. On top of this MFGP pays more dividend than 99.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, MFGP pays a better dividend.
Industry RankSector Rank
Dividend Yield 4.09%

5.2 History

MFGP has been paying a dividend for over 5 years, so it has already some track record.
The dividend of MFGP decreased recently.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
MFGP Yearly Dividends per shareMFGP Yearly Dividends per shareYearly Dividends per share 2018 2019 2020 2021 2022 0.2 0.4 0.6 0.8 1

5.3 Sustainability

The earnings of MFGP are negative and hence is the payout ratio. MFGP will probably not be able to sustain this dividend level.
DP-22.27%
EPS Next 2Y-13.56%
EPS Next 3Y-8.54%
MFGP Yearly Income VS Free CF VS DividendMFGP Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 0 1B -1B -2B

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Micro Focus International plc

NYSE:MFGP (1/30/2023, 8:08:28 PM)

After market: 6.29 -0.19 (-2.93%)

6.48

-0.03 (-0.46%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)02-06 2023-02-06/amc
Earnings (Next)06-20 2023-06-20/amc
Inst Owners0%
Inst Owner Change0%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap2.20B
Analysts75
Price Target6.01 (-7.25%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield 4.09%
Yearly Dividend0.16
Dividend Growth(5Y)N/A
DP-22.27%
Div Incr Years1
Div Non Decr Years1
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)258.97%
Min EPS beat(2)258.97%
Max EPS beat(2)258.97%
EPS beat(4)2
Avg EPS beat(4)134.57%
Min EPS beat(4)10.17%
Max EPS beat(4)258.97%
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)0
Avg Revenue beat(2)-4.47%
Min Revenue beat(2)-4.47%
Max Revenue beat(2)-4.47%
Revenue beat(4)0
Avg Revenue beat(4)-2.36%
Min Revenue beat(4)-4.47%
Max Revenue beat(4)-0.26%
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)-3.49%
PT rev (3m)0.38%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.04%
EPS NY rev (3m)-0.07%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.02%
Valuation
Industry RankSector Rank
PE 4.63
Fwd PE 6.21
P/S 0.76
P/FCF 12.25
P/OCF 8.77
P/B 0.83
P/tB N/A
EV/EBITDA 5.99
EPS(TTM)1.4
EY21.6%
EPS(NY)1.04
Fwd EY16.11%
FCF(TTM)0.53
FCFY8.16%
OCF(TTM)0.74
OCFY11.4%
SpS8.55
BVpS7.82
TBVpS-14.34
PEG (NY)N/A
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA N/A
ROE N/A
ROCE N/A
ROIC N/A
ROICexc N/A
ROICexgc N/A
OM N/A
PM (TTM) N/A
GM 73.32%
FCFM N/A
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.3%
GM growth 5Y-3.87%
F-Score5
Asset Turnover0.32
Health
Industry RankSector Rank
Debt/Equity 1.57
Debt/FCF 23.67
Debt/EBITDA 4.34
Cap/Depr 7.2%
Cap/Sales N/A
Interest Coverage N/A
Cash Conversion N/A
Profit Quality N/A
Current Ratio 0.85
Quick Ratio 0.85
Altman-Z 0.93
F-Score5
WACC7.83%
ROIC/WACCN/A
Cap/Depr(3y)9.34%
Cap/Depr(5y)11.63%
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-5.84%
EPS 3Y-13.83%
EPS 5YN/A
EPS Q2Q%-13.64%
EPS Next Y-15.19%
EPS Next 2Y-13.56%
EPS Next 3Y-8.54%
EPS Next 5YN/A
Revenue 1Y (TTM)-3.37%
Revenue growth 3Y-15.19%
Revenue growth 5Y18.42%
Sales Q2Q%-10.95%
Revenue Next Year-10.91%
Revenue Next 2Y-7.63%
Revenue Next 3Y-5.58%
Revenue Next 5YN/A
EBIT growth 1Y-103.05%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year2.09%
EBIT Next 3Y0.45%
EBIT Next 5YN/A
FCF growth 1Y-63.54%
FCF growth 3Y-44.44%
FCF growth 5Y-10.81%
OCF growth 1Y-57.09%
OCF growth 3Y-39.85%
OCF growth 5Y-6.76%