McMillan Shakespear (MMS)

 McMillan Shakespeare (MMS) 

14-07-26

https://www.fool.com.au/tickers/asx-mms/

https://www.tradingview.com/symbols/ASX-MMS/financials-overview/

https://stockanalysis.com/quote/asx/mms/

https://koalagains.com/stocks/ASX/mms

https://www.marketindex.com.au/asx/mms

McMillan Shakespeare Limited (MMS) is a Company that is engaged in salary packaging, novated leasing, disability plan management (NDIS) , support co-ordination, asset management and related financial products and services.

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ASX:MMS (McMillan Shakespeare) has staged a strong recovery over the past five years, driven by resilient salary packaging and novated leasing demand. Profits steadily climbed from COVID-era lows, with the company commanding a massive Return on Equity (ROE) well above 50% and maintaining robust dividends, despite carrying high levels of corporate debt. [1, 2, 3, 4]

Financial Highlights over the Last 5 Years

• Profit (NPAT): After dropping to A$32.3M during the pandemic (FY21), annual net profit rebounded sharply. The company posted A$83.5M in FY24 and A$95.3M in FY25, carrying this momentum into FY26 where it reported a 9% year-on-year increase in 1H FY26 net income. [, 2]

• Debt: The company holds A$781.1M in total debt against roughly A$112.7M in shareholder equity, resulting in an exceptionally high debt-to-equity ratio. However, much of this is structural fleet funding debt. It's leases on cars that they package up and sell to a bank. The core corporate Debt/EBITDA ratio remains at a comfortable 0.5x, and the interest coverage ratio is a healthy 4.2x. [1, 3]
• Return on Equity (ROE): MMS is a highly capital-efficient business. Driven by its lean asset base and consistent profit generation, the ROE has averaged between 45% and 88% over the period. [, 2, 3, 4]

• Dividends: The company has rewarded shareholders consistently, distributing a 100% payout ratio of normalized earnings with yields frequently hovering around 7% to 8% fully franked. [1, 2]

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These guys are heavily involved in the NDIS ... will they be effected by the future cost cutting going on with the government?

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ROIC vs WACC 2026

McMillan Shakespeare Limited (ASX:MMS) maintains a strong positive economic spread, with its return on invested capital (ROIC) consistently exceeding its weighted average cost of capital (WACC) over the past 10 years. [1, 2]

• Current Metrics: MMS displays a trailing ROIC of roughly 15.98% to 22.42% (depending on exact capital definitions like ROCE) against a WACC of approximately 6.47%, indicating robust and ongoing shareholder value creation. [1, 2]
10-Year Trend: Throughout the decade, the company's asset-light salary packaging and novated leasing business model has reliably generated high operational returns well above its blended cost of funding. [1, 2]

Capital Efficiency and Value Creation

Value Generation: Because ROIC remains higher than WACC year after year, every dollar the company reinvests into its core operations successfully compounds economic value rather than destroying it. [1, 2]
Business Stability: McMillan Shakespeare has kept positive profitability status across all 10 fiscal cycles, supported by stable cash flows and manageable capital structures. [1, 2]

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