Latest news with #SparkNewZealand
Time of India
12-08-2025
- Business
- Time of India
Spark NZ to sell 75% of data centre business in deal valued at $419 million
Spark New Zealand said on Tuesday it will sell a 75% stake in its data centre business to Australian fund manager Pacific Equity Partners , valuing the business at up to NZ$705 million ($418.63 million). The telecom company expects to receive approximately NZ$486 million in cash proceeds from the transaction. The company said that bringing on Pacific Equity as a capital partner will secure funding for planned data centre capacity expansion. Spark will retain a 25% stake to maintain its presence in New Zealand's growing market for AI infrastructure. The data-centre assets and operations will be transferred into a new stand-alone company, provisionally named "DC Co," with its own management team and financing facilities. Chief Executive Jolie Hodson said DC Co has "advanced plans in place" for a greenfield site on Auckland's North Shore and for further expansions at the Takanini site in South Auckland.
Bloomberg
10-08-2025
- Business
- Bloomberg
Pacific Equity Nearing Deal for Spark's Data Centers, AFR Says
Pacific Equity Partners is in advanced talks to acquire a majority stake in Spark New Zealand Ltd. 's data center business in a deal that would value the assets at more than NZ$600 million ($357 million), the Australian Financial Review reported. The private equity firm is expected to add a stake of between 50% to 70% of Spark's data center business, according to the newspaper, which didn't cite a source for the information.
Yahoo
23-05-2025
- Business
- Yahoo
Returns On Capital Signal Difficult Times Ahead For Spark New Zealand (NZSE:SPK)
When researching a stock for investment, what can tell us that the company is in decline? Businesses in decline often have two underlying trends, firstly, a declining return on capital employed (ROCE) and a declining base of capital employed. This combination can tell you that not only is the company investing less, it's earning less on what it does invest. And from a first read, things don't look too good at Spark New Zealand (NZSE:SPK), so let's see why. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Spark New Zealand: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.13 = NZ$476m ÷ (NZ$4.9b - NZ$1.2b) (Based on the trailing twelve months to December 2024). So, Spark New Zealand has an ROCE of 13%. In absolute terms, that's a satisfactory return, but compared to the Telecom industry average of 10% it's much better. Check out our latest analysis for Spark New Zealand Above you can see how the current ROCE for Spark New Zealand compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Spark New Zealand for free. In terms of Spark New Zealand's historical ROCE movements, the trend doesn't inspire confidence. Unfortunately the returns on capital have diminished from the 19% that they were earning five years ago. Meanwhile, capital employed in the business has stayed roughly the flat over the period. Companies that exhibit these attributes tend to not be shrinking, but they can be mature and facing pressure on their margins from competition. So because these trends aren't typically conducive to creating a multi-bagger, we wouldn't hold our breath on Spark New Zealand becoming one if things continue as they have. In summary, it's unfortunate that Spark New Zealand is generating lower returns from the same amount of capital. Investors haven't taken kindly to these developments, since the stock has declined 28% from where it was five years ago. With underlying trends that aren't great in these areas, we'd consider looking elsewhere. Spark New Zealand does have some risks, we noticed 3 warning signs (and 1 which is a bit unpleasant) we think you should know about. For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-05-2025
- Business
- Yahoo
Spark New Zealand (NZSE:SPK) earnings and shareholder returns have been trending downwards for the last three years, but the stock climbs 3.4% this past week
For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. Unfortunately, that's been the case for longer term Spark New Zealand Limited (NZSE:SPK) shareholders, since the share price is down 55% in the last three years, falling well short of the market decline of around 9.4%. The more recent news is of little comfort, with the share price down 50% in a year. Furthermore, it's down 26% in about a quarter. That's not much fun for holders. The recent uptick of 3.4% could be a positive sign of things to come, so let's take a look at historical fundamentals. Our free stock report includes 4 warning signs investors should be aware of before investing in Spark New Zealand. Read for free now. While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. Spark New Zealand saw its EPS decline at a compound rate of 23% per year, over the last three years. So do you think it's a coincidence that the share price has dropped 23% per year, a very similar rate to the EPS? We don't. So it seems that investor expectations of the company are staying pretty steady, despite the disappointment. It seems like the share price is reflecting the declining earnings per share. The image below shows how EPS has tracked over time (if you click on the image you can see greater detail). NZSE:SPK Earnings Per Share Growth May 8th 2025 It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Spark New Zealand's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further. What About Dividends? When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Spark New Zealand, it has a TSR of -43% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
Yahoo
23-04-2025
- Business
- Yahoo
Are Investors Undervaluing Spark New Zealand Limited (NZSE:SPK) By 46%?
The projected fair value for Spark New Zealand is NZ$3.86 based on 2 Stage Free Cash Flow to Equity Spark New Zealand is estimated to be 46% undervalued based on current share price of NZ$2.07 Analyst price target for SPK is NZ$2.96 which is 23% below our fair value estimate How far off is Spark New Zealand Limited (NZSE:SPK) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (NZ$, Millions) NZ$407.0m NZ$331.2m NZ$307.5m NZ$331.5m NZ$300.1m NZ$298.3m NZ$299.9m NZ$303.9m NZ$309.5m NZ$316.5m Growth Rate Estimate Source Analyst x3 Analyst x3 Analyst x3 Analyst x2 Analyst x2 Est @ -0.58% Est @ 0.54% Est @ 1.32% Est @ 1.87% Est @ 2.25% Present Value (NZ$, Millions) Discounted @ 6.6% NZ$382 NZ$291 NZ$254 NZ$257 NZ$218 NZ$203 NZ$192 NZ$182 NZ$174 NZ$167 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = NZ$2.3b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 3.2%. We discount the terminal cash flows to today's value at a cost of equity of 6.6%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = NZ$317m× (1 + 3.2%) ÷ (6.6%– 3.2%) = NZ$9.4b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= NZ$9.4b÷ ( 1 + 6.6%)10= NZ$5.0b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is NZ$7.3b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of NZ$2.1, the company appears quite undervalued at a 46% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Spark New Zealand as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.6%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Spark New Zealand Strength Debt is well covered by earnings and cashflows. Dividend is in the top 25% of dividend payers in the market. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow for the next 3 years. Trading below our estimate of fair value by more than 20%. Significant insider buying over the past 3 months. Threat Dividends are not covered by earnings and cashflows. Annual earnings are forecast to grow slower than the New Zealander market. Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Why is the intrinsic value higher than the current share price? For Spark New Zealand, there are three important aspects you should further research: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Spark New Zealand (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for SPK's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NZSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
