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Metcash Limited
Consumer Defensive · Food Distribution
Updated just now
$2.97
MARKET CAP
$3.27B
P/E RATIO
11.5
DIV. YIELD
6.0%
FRANKING
100%
Metcash Limited operates as a wholesale distribution and marketing company in Australia. It operates through Food, Liquor, and Hardware segments. The Food segment distributes a range of products and services to independent supermarket, convenience retail outlets, and food service customers.
View full descriptionThe Warsi Rating combines two proven approaches: value investing principles and dividend strategy. A stock must score 70+ on both to be rated Solid or higher.
$9.10
Discounted cash flow estimate
$3.17
For 6% dividend yield
Business quality and balance-sheet durability.
Real cash left after running the business
Positive cash generation. Company produces real cash after capital expenditures - can fund dividends, buybacks, or growth.
Current Snapshot
Current FCF
$391M
Pass Rule
> $0
Status
Positive
Why It Matters
Free cash flow is the cash available after core operating and capital needs. It is central to dividend capacity.
Formula
Operating Cash Flow - Capital ExpendituresMethod
Review whether free cash flow is consistently positive and whether it is sufficient relative to dividends and debt needs.
Worked Example
This company generated $391M in free cash flow — cash left after operating costs and capital expenditure. Positive FCF means dividends are funded by real cash generation.
How to Interpret
Persistently negative free cash flow can force reliance on borrowing or equity issuance to maintain payouts.
Positive cash flow means dividends are funded by actual money, not accounting profits. As Buffett says, "Cash is fact, profit is opinion." Your income is backed by real cash generation.
Sources
Short-term assets vs. short-term debts
Profit generated per $1 of shareholder investment
How much the company owes vs. what it owns
Profit after production costs, before overhead
Price versus estimated intrinsic value and required return thresholds.
What percentage of the stock price comes back as earnings each year
How efficiently the company turns money into profit
Is the business growing — and is debt being managed responsibly?
Revenue and debt both growing — check whether debt is funding productive growth or covering shortfalls. Sustainable dividends require revenue to outpace debt over time.
Current Snapshot
Revenue Change
+14.2%
Debt Change
+42.8%
Trend State
Mixed
Why It Matters
Revenue trend shows whether the business is expanding or contracting. Debt trend adds context on whether growth is being funded conservatively.
Formula
Revenue Change (%) = (Latest Revenue - Earliest Revenue) / |Earliest Revenue| x 100; Debt Change (%) = (Latest Debt - Earliest Debt) / |Earliest Debt| x 100Method
Map annual revenue history and, where relevant, annual debt history. For financial companies, debt is excluded because deposits and reserves distort this signal.
Worked Example
Revenue changed by +14.2% across the displayed period, while debt changed by +42.8%.
How to Interpret
Rising revenue with stable or falling debt is typically stronger than rising revenue funded by rapidly rising leverage.
Revenue and debt both growing — check whether debt is funding productive growth or covering shortfalls. Sustainable dividends require revenue to outpace debt over time.
Sources
Annual dividends as percentage of stock price
6.40% yield meets Barsi's 6% minimum. Based on 6-year average, not one-time spikes.
Current Snapshot
6Y Avg Yield
6.4%
6% Requirement
6.0%
Gross Yield
9.1%
Why It Matters
Yield translates dividend income into a percentage of the price paid, which is central to income-first screening.
Formula
Annual Dividends per Share / Stock Price x 100Method
Use the 6-year average annual dividend for consistency and compare the result with the 6% framework requirement.
Worked Example
With a 6-year average annual dividend of $0.19 and a share price of $2.97, the Barsi yield is 6.4%. The minimum requirement is 6%. Including franking credits, the gross yield is 9.1%.
How to Interpret
Higher sustainable yield improves upfront income, but unusually high yields may reflect elevated risk or weak coverage.
This yield provides meaningful income that can beat inflation and compound over time. With DRIP enabled, this income can snowball into significant wealth.
Sources
Track record of consistent dividend payments
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| ~5 June 2026Est | ~12 Aug 2026 | ~$0.14 | 100% | ~$0.10 | $0.04 |
| ~30 Nov 2026Est | ~28 Jan 2027 | ~$0.14 | 100% | ~$0.10 | $0.04 |
Highest price to lock in 6% yield
Industry category of the business
Consumer Defensive is not a BESST sector. Non-BESST stocks receive a lower base score but can still qualify with exceptional dividend metrics.
Current Snapshot
Industry
Food Distribution
BESST Match
No
Score Impact
No bonus
Why It Matters
Sector classification helps contextualise risk and demand durability, which can materially affect dividend stability.
Formula
BESST Match = Sector in {Banks, Energy, Sanitation, Insurance, Telecom}Method
Match company sector or industry against BESST categories. A match adds scoring support but does not replace core dividend checks.
Worked Example
This company operates in Food Distribution (Consumer Defensive sector). It does not match a BESST sector, so it receives the standard base score. Non-BESST stocks can still qualify with strong dividend metrics.
How to Interpret
Sources
How much of a company's earnings are paid out as dividends
A 70% payout is in the sustainable range (30–75%) — the company balances rewarding shareholders with reinvesting for growth. This gives the price ceiling calculation a stable base, which is a healthy sign for long-term dividend investors.
Current Snapshot
Latest Ratio
69.8%
Healthy Range
30%-75%
Zone
Healthy
Why It Matters
Payout ratio links dividends to earnings capacity and helps evaluate whether current distributions are likely to remain supportable.
Formula
Payout Ratio (%) = (Annual Dividend per Share / Earnings per Share) x 100Method
Calculate year-by-year payout ratios where EPS is positive, classify each year by sustainability zone, and compare with the current TTM ratio.
Worked Example
$0.18 dividend / $0.26 EPS equals 69.8% payout ratio.
How to Interpret
Ratios in the middle range are usually more sustainable than very high ratios. Values above 100% indicate dividends exceeded earnings in that period.
A 70% payout is in the sustainable range (30–75%) — the company balances rewarding shareholders with reinvesting for growth. This gives the price ceiling calculation a stable base, which is a healthy sign for long-term dividend investors.
Sources
10-year ROE trends, dividend history, price ceiling calculations, and every red flag explained.
See the Full BreakdownFree. No card. 10 seconds.
Current ratio of 1.04 is below ideal 1.5. Adequate but limited cushion for unexpected expenses.
Current Snapshot
Current Ratio
1.04x
Warning Floor
1.00x
Target
1.50x
Why It Matters
Liquidity supports operational stability. Companies with weak liquidity can face pressure even when long-term fundamentals are sound.
Formula
Current Assets / Current LiabilitiesMethod
Compare the current ratio to the warning floor and target level used in the framework.
Worked Example
This company's current ratio is 1.04x — it has $1.04 in short-term assets for every $1 of short-term liabilities. The target is 1.5x, with a warning floor at 1.0x.
How to Interpret
Ratios above the target suggest healthier short-term resilience; ratios below 1.0x can indicate immediate funding risk.
Limited liquidity increases the risk of dividend cuts if cash flow becomes stressed during a downturn. There's less buffer to absorb surprises.
Sources
17.8% average is below the 20% threshold. This suggests the business may lack a durable competitive advantage. Note: COVID-19 Pandemic year(s) excluded — ROE recovered to 161% of target.
Current Snapshot
10Y Avg
17.8%
Threshold
20.0%
Worst Year
13.1%
Why It Matters
ROE shows how effectively management turns shareholder capital into profit. High and stable ROE can signal pricing power, cost discipline, or both.
Formula
Net Income / Shareholders' Equity x 100Method
Use the 10-year average ROE and review the weakest year to check whether returns stayed resilient across cycles.
Worked Example
This company's 10-year average ROE is 17.8%, meaning each $1 of shareholder equity generates $0.18 in annual profit. The threshold is 20%, and the worst single year was 13.1%.
How to Interpret
Higher and steadier ROE generally supports stronger long-term compounding. Large drawdowns in weak years can point to fragility.
Lower ROE means your investment compounds more slowly. At 17.8%, this business needs more capital to generate the same returns as competitors. Consider whether other strengths (yield, stability) compensate for weaker profitability.
Sources
Debt-to-equity of 1.16 is 2.3x over Buffett's limit. High leverage increases risk during downturns.
Current Snapshot
Current D/E
1.16x
Industry Limit
0.50x
Headroom
-0.66x
Why It Matters
Debt-to-equity shows balance-sheet risk. Lower leverage usually means more flexibility when earnings soften.
Formula
Total Debt / Shareholders' EquityMethod
Compare current D/E against the industry threshold used in the scoring framework, then assess remaining headroom.
Worked Example
This company's D/E is 1.16, meaning it carries 116 cents of debt for every $1 of equity. The consumer staples limit is 0.50, leaving it 0.66 over the limit.
How to Interpret
Lower values generally imply lower refinancing pressure and lower dividend stress in downturns.
High debt means interest payments come before dividends. During recessions, heavily indebted companies often cut dividends first to preserve cash. This adds risk to your income stream.
Sources
Worst year margin (11.1%) fell below 35% minimum. Volatility suggests weak pricing power or one-time issues.
Current Snapshot
10Y Avg
12.0%
Threshold
40%
Worst Year
11.1%
Why It Matters
Gross margin indicates how much room a business has to absorb costs and still generate profit.
Formula
(Revenue - Cost of Goods Sold) / Revenue x 100Method
Assess both the long-term average and the weakest year. The framework checks for both level and consistency.
Worked Example
This company's 4-year average gross margin is 12.0% — it keeps 12 cents of every revenue dollar after production costs. The threshold is 40%, and the weakest year was 11.1%.
How to Interpret
Sustained high margins usually support durability. Sharp margin swings can signal weaker control or cyclical pressure.
Thin margins leave no cushion for unexpected costs. A small increase in expenses or drop in prices could squeeze profits and threaten the dividend.
Sources
8.7% earnings yield exceeds the 7.5% threshold, meaning you're well compensated for owning shares instead of bonds.
Current Snapshot
Current Yield
8.7%
Required Yield
7.5%
Spread
+1.2pp
Why It Matters
Earnings yield reframes valuation as return on price paid. It helps compare equity earnings power against lower-risk alternatives.
Formula
(Earnings per Share / Stock Price) x 100Method
Calculate current earnings yield, then compare it to the required yield for the stock's industry setting.
Worked Example
With EPS of $0.26 and a share price of $2.97, earnings yield is 8.7%. The required yield for this industry is 7.5% (based on 4.5% government bond rate plus a risk premium).
How to Interpret
A yield above the required level suggests better valuation support; below it indicates thinner compensation for equity risk.
You're getting a fair return for the risk of owning shares instead of safe bonds. The earnings power justifies the price you're paying.
Sources
How current price compares with estimated intrinsic value
Exceptional discount: 56% BELOW the fair-value threshold (includes 25% margin of safety).
Current Snapshot
Current Margin
67.4%
Industry Threshold
25%
Status
56% Undervalued
Why It Matters
Margin of safety provides a valuation buffer against modelling uncertainty and adverse business outcomes.
Formula
(Estimated Intrinsic Value per Share - Current Price) / Estimated Intrinsic Value per Share x 100Method
Estimate intrinsic value using a two-stage DCF (10-year projection plus terminal value), then compare with current price.
Worked Example
For this stock now: intrinsic value is $9.10 per share, current price is $2.97, and margin of safety is 67.4%.
How to Interpret
Positive margin indicates price below modelled value; negative margin indicates price above modelled value. Compare against the industry's required buffer.
The market price sits far below your required entry threshold, providing a substantial valuation buffer if assumptions prove optimistic.
Sources
14.3% ROIC exceeds the 10.5% threshold, indicating adequate capital efficiency.
Current Snapshot
5Y Avg
14.3%
Threshold
10.5%
WACC Delta
+5.8pp
Why It Matters
ROIC measures capital efficiency. Businesses that repeatedly earn above their funding cost can compound value more effectively.
Formula
After-Tax Operating Profit / Invested Capital x 100Method
Use the 5-year average ROIC and compare it with industry WACC plus the required spread in this framework.
Worked Example
This company's 5-year average ROIC is 14.3%, with a cost of capital (WACC) of 8.5%. The +5.8pp spread above WACC suggests it creates value on each dollar invested.
How to Interpret
A healthy spread above WACC suggests value creation; a narrow or negative spread points to weaker capital efficiency.
Returns exceed capital costs - this company creates value rather than destroying it. The business has the foundation to sustain and grow dividends.
Sources
Years of earnings needed to retire all long-term debt
Manageable debt. Could pay off long-term debt in 1.5 years — comfortably within the 4-year threshold.
Current Snapshot
Payoff Years
1.5yr
Target Years
4yr
Gap
+2.5yr
Why It Matters
Debt payoff years converts leverage into an intuitive time measure, making debt burden easier to compare across stocks.
Formula
Long-Term Debt / Average Net Income (3yr)Method
Use current long-term debt and the 3-year average net income to smooth one-off profit noise.
Worked Example
With $399M in long-term debt and $267M in average annual earnings (3yr), it would take 1.5 years of earnings to pay off all debt. The consumer staples threshold is 4 years.
How to Interpret
Lower values generally indicate stronger debt capacity. Very high values can constrain dividend resilience.
Debt is comfortably serviceable from earnings. This means interest payments won't crowd out dividends, even during moderate downturns.
Sources
Consistency of profits over time
1 loss year(s) found with only 4 years of data. Limited data requires 100% positive EPS - industry exemptions don't apply.
Current Snapshot
Positive Years
8/4
Allowed Losses
0 (limited)
EPS CAGR
1.4%
Why It Matters
Consistency in EPS helps distinguish resilient earnings power from one-off performance spikes.
Formula
Positive EPS Years / Available EPS YearsMethod
For 8+ years of data, apply industry-specific loss tolerance. For limited data, every available year must be positive.
Worked Example
This company reported positive earnings in 8 of the last 4 years, with 1 loss year. With only 4 years of data, every year must be positive. EPS growth rate (CAGR) is 1.4%.
How to Interpret
Fewer loss years and stronger EPS continuity generally improve confidence in future dividend and valuation assumptions.
Loss years signal unpredictable earnings. During loss periods, companies often cut dividends to preserve cash. Your income could be at risk in the next downturn.
Sources
How much earnings are consumed by capital expenditure
CapEx consumes 53% of cumulative earnings — above the 50% threshold. This business requires heavy reinvestment just to maintain operations.
Current Snapshot
10Y CapEx Intensity
53%
Threshold
50%
Buffer
-3%
Why It Matters
CapEx intensity estimates how much of earnings must be reinvested just to sustain operations.
Formula
Cumulative CapEx (10yr) / Cumulative Net Income (10yr) x 100Method
Aggregate 10-year CapEx and net income, then compare the ratio with the sector threshold in the framework.
Worked Example
Over 10 years, 53% of this company's cumulative earnings were consumed by capital expenditure. The consumer staples threshold is 50%, leaving a buffer of -3% (over threshold).
How to Interpret
Lower ratios usually indicate better cash conversion. Higher ratios can reduce room for dividends and buybacks.
High capital intensity means most earnings go back into equipment and infrastructure rather than dividends or growth. Buffett prefers businesses like See's Candies that generate cash without needing much reinvestment.
Sources
Percentage of revenue that becomes profit after all expenses
1.6% net margin is below the 3% threshold. Thin margins suggest weak competitive position or high costs.
Current Snapshot
Current Margin
1.6%
Threshold
3.0%
Relative Position
-1.4%
Why It Matters
Net income margin shows how much profit the business keeps from each dollar of revenue after all costs.
Formula
Net Income / Total Revenue x 100Method
Compare current margin with the industry-specific threshold to avoid cross-sector distortions.
Worked Example
This company's net income margin is 1.6% — it keeps 2 cents of every revenue dollar as profit after all expenses. The consumer staples threshold is 3%, putting it 1.4% below the requirement.
How to Interpret
Margins that are both strong and stable can indicate competitive strength; persistent weakness may limit reinvestment and payout capacity.
Thin margins mean a small increase in costs or drop in prices could eliminate profits entirely. This puts dividends at risk because there's no buffer to absorb shocks.
Sources
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| 12 Dec 2025Interim | 28 Jan 2026 | $0.12 | 100% | $0.09 | $0.04 |
| 15 July 2025Final | 12 Aug 2025 | $0.10 | 0% | $0.10 | $0.00 |
| 13 Dec 2024Interim | 10 Jan 2025 | $0.09 | 0% | $0.09 | $0.00 |
| 16 July 2024Final | 13 Aug 2024 | $0.09 | 0% | $0.09 | $0.00 |
| 14 Dec 2023Interim | 11 Jan 2024 | $0.11 | 0% | $0.11 | $0.00 |
| 18 July 2023Final | 15 Aug 2023 | $0.11 | 0% | $0.11 | $0.00 |
| 20 Dec 2022Interim | 17 Jan 2023 | $0.12 | 0% | $0.12 | $0.00 |
| 12 July 2022Final | 9 Aug 2022 | $0.11 | 0% | $0.11 | $0.00 |
| 21 Dec 2021Interim | 18 Jan 2022 | $0.10 | 0% | $0.10 | $0.00 |
| 1 July 2021Final | 29 July 2021 | $0.10 | 0% | $0.10 | $0.00 |
9 years of consistent dividends meets Barsi's 6-year minimum requirement.
Current Snapshot
History
9yr
Predictability
Stable
Payout Health
Elevated
Why It Matters
Payment consistency is a direct test of dividend reliability. Large cuts or skips often appear before confidence recovers.
Formula
Consecutive Years = count of years with dividend payments and no disqualifying skip/cut eventsMethod
Require at least 6 years of history, then check for skipped years and large cuts, allowing approved systemic-event exceptions.
Worked Example
This company has 9 years of dividend history (2017–2025). No suspensions detected — 9 consecutive years of payments. Predictability: Stable. Payout health: Elevated. The minimum requirement is 6 years.
How to Interpret
Longer uninterrupted records generally signal stronger income reliability than high yield alone.
A consistent track record through recent years gives confidence your income will continue. This company has shown commitment to shareholder returns.
Sources
Current price is favourable. Locks in 6%+ dividend yield based on historical average.
Current Snapshot
Current Price
$2.97
Max Buy Price
$3.17
Delta
+6.3%
Why It Matters
The price ceiling links valuation discipline to income targets by defining the price that aligns with a 6% yield target.
Formula
6-Year Average Annual Dividend / 0.06Method
Use the 6-year average dividend (not one year) and divide by 0.06 to estimate the maximum entry price for target yield.
Worked Example
With a current price of $2.97 and a ceiling of $3.17, the entry is 6.3% below the ceiling.
How to Interpret
Prices below the ceiling imply a historical yield above 6%; prices above it imply a lower historical yield at entry.
Buying below the ceiling locks in your target yield based on proven historical dividends — not projections. Your income is secured at this price.
Sources
BESST alignment is a positive context signal. Non-BESST stocks can still qualify with strong yield and dividend consistency.
Non-essential businesses face demand drops during recessions — discretionary spending is first to be cut. This increases cyclical risk for dividends, but companies with decades of consistent payments can still demonstrate durability.