Spark New Zealand Ltd. relative valuation is now NEUTRAL. It was previously rated OVERVALUED, and has a fundamental analysis score of 66.
Our analysis is based on comparing Spark New Zealand Ltd. with the following peers – Telstra Corporation Limited, Hutchison Telecommunications (Australia) Limited, Macquarie Telecom Group Limited and SKY Network Television Limited (TLS-AU, HTA-AU, MAQ-AU and SKT-AU).
Spark New Zealand Ltd. is currently neutrally valued, as its previous close of AUD 3.15 lies within the CapitalCube estimate range of AUD 2.83 to AUD 3.15. Over the last 52 week period, Spark New Zealand Ltd. has fluctuated between AUD 3.05 and AUD 3.84.
- Compared to peers, relative outperformance over the last year has faded more recently.
- It’s current Price/Book of 3.62 is about median in its peer group.
- SPK-AU‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
- SPK-AU‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
- Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
- Over the last five years, SPK-AU‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
- The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
- While SPK-AU‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
- The company’s level of capital investment seems appropriate to support the company’s growth.
- SPK-AU has the financial and operating capacity to borrow quickly.
Spark New Zealand Ltd. has a fundamental score of 66 and has a relative valuation of NEUTRAL.
Spark New Zealand Ltd. appears on the top right hand quadrant of CapitalCube’s Value – Price Matrix. We classify this as ‘Safety’. In other words, Spark New Zealand Ltd. has a relatively high Fundamental Analysis score of 66, while being potentially overvalued and trading higher than its CapitalCube Implied Price of 2.99. There might be some safety in this stock where it’s fundamental strength perhaps justifies its relatively higher price.
Quadrant label definitions. Hover to know more
Drivers of Valuation
The market seems to expect SPK-AU to maintain its relatively high returns.
SPK-AU‘s operating performance is higher than the median of its chosen peers (ROE of 22.69% compared to the peer median ROE of 11.28%) but the market does not seem to expect higher growth relative to peers (P/E of 15.81 compared to peer median of 15.74) but simply to maintain its relatively high rates of return.
The company’s current Price/Book of 3.62 is about median in its peer group.
Quadrant label definitions. Hover to know more
SPK-AU has maintained its relatively high ROE profile from the prior year-end.
A complete list of valuation metrics is available on the company page.
Spark New Zealand Ltd. engages in the provision of telecommunications and information and communications technology (ICT) services. It operates through the following segments: Spark Home, Mobile and Business; Spark Digital; and Spark Connect. The Spark Home, Mobile & Business segment provides fixed line, mobile and internet services. The Spark Digital segment integrates information technology (IT) and telecommunications services to provide converged ICT solutions. The Spark Connect segment includes the group’s network and IT operations, shared business operations and servicing of wholesale and international customers. The company was founded on February 24, 1987 and is headquartered in Auckland, New Zealand.
The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.