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Spark New Zealand Limited
Communication Services · Telecom Services
Updated 12 hours ago
$1.73
Spark New Zealand Limited, together with its subsidiaries, provides telecommunications and digital services in New Zealand. It operates through Mobile, Broadband, IT Products, Voice, IT Services, Procurement and Partners, and High-tech segments.
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.
MARKET CAP
$3.27B
P/E RATIO
12.3
DIV. YIELD
11.9%
FRANKING
—
10-year ROE trends, dividend history, price ceiling calculations, and every red flag explained.
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Strong 28.2% average with no year below 12%. Consistent performance signals durable competitive advantage.
Current Snapshot
10Y Avg
28.2%
Threshold
12.0%
Worst Year
17.1%
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 28.2%, meaning each $1 of shareholder equity generates $0.28 in annual profit. The threshold is 12%, and the worst single year was 17.1%.
How to Interpret
Higher and steadier ROE generally supports stronger long-term compounding. Large drawdowns in weak years can point to fragility.
At 28.2% ROE, every $1 retained by this company generates $0.28 in annual profit. This compounding power drives long-term wealth - and for dividend investors, it typically means sustainable dividend growth without needing debt.
Sources
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
$240M
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 $240M 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
How much the company owes vs. what it owns
Debt-to-equity of 1.55 is 1.5x over Buffett's limit. High leverage increases risk during downturns.
Current Snapshot
Current D/E
1.55x
Industry Limit
1.00x
Headroom
-0.55x
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 1.55, meaning it carries 155 cents of debt for every $1 of equity. The telecommunications limit is 1.00, leaving it 0.55 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
Price versus estimated intrinsic value and required return thresholds.
What percentage of the stock price comes back as earnings each year
8.1% earnings yield exceeds the 7.0% threshold, meaning you're well compensated for owning shares instead of bonds.
Current Snapshot
Current Yield
8.1%
Required Yield
7.0%
Spread
+1.1pp
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 $0.14 and a share price of $1.73, earnings yield is 8.1%. The required yield for this industry is 7.0% (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
Consistency of profits over time
10/10 positive EPS years demonstrates highly predictable earnings through multiple economic cycles.
Current Snapshot
Positive Years
10/10
Allowed Losses
0
EPS CAGR
-4.2%
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 10 of the last 10 years. The allowed loss tolerance for this industry is 0 years. EPS growth rate (CAGR) is -4.2%.
How to Interpret
Fewer loss years and stronger EPS continuity generally improve confidence in future dividend and valuation assumptions.
A perfect track record through multiple economic cycles means this company generates profits in good times and bad. Your dividend has a solid foundation.
Sources
Years of earnings needed to retire all long-term debt
How efficiently the company turns money into profit
How much earnings are consumed by capital expenditure
Percentage of revenue that becomes profit after all expenses
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
+13.6%
Debt Change
+181.6%
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 +13.6% across the displayed period, while debt changed by +181.6%.
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
12.38% yield significantly exceeds Barsi's 6% minimum. Based on 6-year average, not one-time spikes.
Current Snapshot
6Y Avg Yield
12.4%
6% Requirement
6.0%
Gross Yield
N/A
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 $0.21 and a share price of $1.73, the Barsi yield is 12.4%. The minimum requirement is 6%.
How to Interpret
Higher sustainable yield improves upfront income, but unusually high yields may reflect elevated risk or weak coverage.
Very high yields can signal trouble — the stock price may have dropped because the market expects a dividend cut. Verify the payout ratio is sustainable and the company can maintain this level of distributions before relying on this income.
Sources
Track record of consistent dividend payments
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| 19 Mar 2026Interim | 10 Apr 2026 | $0.06 | 0% | $0.06 | $0.00 |
| ~17 Sept 2026Est | ~5 Oct 2026 | ~$0.09 | 0% | ~$0.09 | $0.00 |
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| 9 Sept 2025Final | 3 Oct 2025 | $0.11 | 0% | $0.11 | $0.00 |
| 20 Mar 2025Interim | 4 Apr 2025 | $0.11 | 0% | $0.11 | $0.00 |
| 12 Sept 2024Final | 17 Oct 2024 | $0.13 | 0% | $0.13 | $0.00 |
| 21 Mar 2024Interim | 25 Apr 2024 | $0.12 | 0% | $0.12 | $0.00 |
| 14 Sept 2023Final | 6 Oct 2023 | $0.12 | 0% | $0.12 | $0.00 |
| 16 Mar 2023Interim | 6 Apr 2023 | $0.13 | 0% | $0.13 | $0.00 |
| 15 Sept 2022Final | 7 Oct 2022 | $0.11 | 0% | $0.11 | $0.00 |
| 24 Mar 2022Interim | 8 Apr 2022 | $0.14 | 0% | $0.14 | $0.00 |
| 16 Sept 2021Final | 1 Oct 2021 | $0.12 | 0% | $0.12 | $0.00 |
| 18 Mar 2021Interim | 9 Apr 2021 | $0.13 | 0% | $0.13 | $0.00 |
Excellent track record. 11 years of consistent dividends through multiple market cycles.
Current Snapshot
History
11yr
Predictability
Variable
Payout Health
High risk
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 11 years of dividend history (2016–2026). No suspensions detected — 11 consecutive years of payments. Predictability: Variable. Payout health: High risk. The minimum requirement is 6 years.
How to Interpret
Longer uninterrupted records generally signal stronger income reliability than high yield alone.
A 11-year track record through multiple economic cycles gives confidence your income will continue. This company has proven it prioritises shareholder returns.
Sources
Highest price to lock in 6% yield
Priced well below ceiling. 52% below means you're locking in well over 6% yield.
Current Snapshot
Current Price
$1.73
Max Buy Price
$3.57
Delta
+51.5%
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 $1.73 and a ceiling of $3.57, the entry is 51.5% 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 this far below the ceiling locks in a yield well above 6% based on proven historical dividends. Your income starts strong from day one.
Sources
Industry category of the business
Telecom is an essential service sector with stable, predictable cash flows - ideal for dividend investing.
Current Snapshot
Industry
Telecom Services
BESST Match
Yes
Score Impact
+3 points
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 Telecom Services (Communication Services sector). It matches the Telecom category — an essential service sector with stable demand, earning a +3 point scoring advantage.
How to Interpret
BESST alignment is a positive context signal. Non-BESST stocks can still qualify with strong yield and dividend consistency.
Essential services maintain demand regardless of economic conditions - people always need electricity, banking, and telecommunications. Your income is protected by inelastic demand.
Sources
How much of a company's earnings are paid out as dividends
The company is paying out more in dividends than it earns (172%). This is unsustainable long-term and often signals a dividend cut ahead. An inflated payout also distorts the price ceiling calculation used in our analysis.
Current Snapshot
Latest Ratio
171.9%
Healthy Range
30%-75%
Zone
Unsustainable
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
$0.22 dividend / $0.13 EPS equals 166.3% 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.
The company is paying out more in dividends than it earns (172%). This is unsustainable long-term and often signals a dividend cut ahead. An inflated payout also distorts the price ceiling calculation used in our analysis.
Sources
Stock is trading 42% BELOW the fair-value threshold (includes 30% margin of safety).
Current Snapshot
Current Margin
59.5%
Industry Threshold
30%
Status
42% 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 $4.27 per share, current price is $1.73, and margin of safety is 59.5%.
How to Interpret
Positive margin indicates price below modelled value; negative margin indicates price above modelled value. Compare against the industry's required buffer.
Price is below your required threshold, so you retain a margin-of-safety buffer against normal valuation error and market volatility.
Sources
Manageable debt. Could pay off long-term debt in 1.9 years — comfortably within the 6-year threshold.
Current Snapshot
Payoff Years
1.9yr
Target Years
6yr
Gap
+4.1yr
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 $1.1B in long-term debt and $570M in average annual earnings (3yr), it would take 1.9 years of earnings to pay off all debt. The telecommunications threshold is 6 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
12.7% ROIC clears the 10.0% threshold, but the spread over the 8.0% cost of capital is narrow. A small decline could eliminate the value-creation margin.
Current Snapshot
5Y Avg
12.7%
Threshold
10.0%
WACC Delta
+4.7pp
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 12.7%, with a cost of capital (WACC) of 8.0%. The +4.7pp 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 but the margin is thin. Monitor for consistency — if ROIC dips or borrowing costs rise, this company could shift from value creator to value destroyer.
Sources
CapEx consumes 91% of cumulative earnings — above the 75% threshold. Expected for this capital-intensive sector.
Current Snapshot
10Y CapEx Intensity
91%
Threshold
75%
Buffer
-16%
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, 91% of this company's cumulative earnings were consumed by capital expenditure. The telecommunications threshold is 75%, leaving a buffer of -16% (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 maintaining the business rather than rewarding shareholders. This is typical for this sector but limits dividend growth potential.
Sources
7.2% net margin is below the 10% threshold. May reflect this sector's structural characteristics.
Current Snapshot
Current Margin
7.2%
Threshold
10.0%
Relative Position
-2.8%
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 7.2% — it keeps 7 cents of every revenue dollar as profit after all expenses. The telecommunications threshold is 10%, putting it 2.8% 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.
Lower margins in this sector are common, but they leave less cushion if costs rise or revenue drops. Monitor whether margins are stable over time — consistency matters more than the absolute level.
Sources