Karora Resources Inc (KRR.CA) Stock Fundamental Analysis

Canada - Toronto Stock Exchange - TSX:KRR - CA48575L2066 - Common Stock

6.7 CAD

+0.16 (+2.45%)

Last: 8/2/2024, 7:00:00 PM

Fundamental Rating

Overall KRR gets a fundamental rating of 7 out of 10. We evaluated KRR against 820 industry peers in the Metals & Mining industry. KRR gets an excellent profitability rating and is at the same time showing great financial health properties. An interesting combination arises when we look at growth and value: KRR is growing strongly while it also seems undervalued. This makes KRR very considerable for value and growth and quality investing!

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1. Profitability

1.1 Basic Checks

In the past year KRR was profitable.
In the past year KRR had a positive cash flow from operations.
KRR had positive earnings in 4 of the past 5 years.
Each year in the past 5 years KRR had a positive operating cash flow.

1.2 Ratios

The Return On Assets of KRR (2.29%) is better than 89.24% of its industry peers.
KRR has a Return On Equity of 3.78%. This is amongst the best in the industry. KRR outperforms 89.86% of its industry peers.
With an excellent Return On Invested Capital value of 5.99%, KRR belongs to the best of the industry, outperforming 94.49% of the companies in the same industry.
KRR had an Average Return On Invested Capital over the past 3 years of 5.90%. This is significantly below the industry average of 12.04%.
The 3 year average ROIC (5.90%) for KRR is below the current ROIC(5.99%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	2.29%
ROE	3.78%
ROIC	5.99%

ROA(3y)3.18%

ROA(5y)6.17%

ROE(3y)5.4%

ROE(5y)10.25%

ROIC(3y)5.9%

ROIC(5y)6.85%

1.3 Margins

KRR's Profit Margin of 3.22% is amongst the best of the industry. KRR outperforms 92.12% of its industry peers.
In the last couple of years the Profit Margin of KRR has declined.
KRR has a Operating Margin of 14.25%. This is amongst the best in the industry. KRR outperforms 92.62% of its industry peers.
KRR's Operating Margin has improved in the last couple of years.
KRR has a Gross Margin of 40.26%. This is amongst the best in the industry. KRR outperforms 94.87% of its industry peers.
KRR's Gross Margin has improved in the last couple of years.

		Industry Rank	Sector Rank
OM	14.25%
PM (TTM)	3.22%
GM	40.26%

OM growth 3Y-21.9%

OM growth 5Y4.75%

PM growth 3Y-61.26%

PM growth 5YN/A

GM growth 3Y-5.96%

GM growth 5Y7.74%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), KRR is destroying value.
Compared to 1 year ago, KRR has more shares outstanding
KRR has a worse debt/assets ratio than last year.

2.2 Solvency

KRR has an Altman-Z score of 4.00. This indicates that KRR is financially healthy and has little risk of bankruptcy at the moment.
KRR has a better Altman-Z score (4.00) than 64.71% of its industry peers.
The Debt to FCF ratio of KRR is 1.63, which is an excellent value as it means it would take KRR, only 1.63 years of fcf income to pay off all of its debts.
KRR has a better Debt to FCF ratio (1.63) than 94.87% of its industry peers.
KRR has a Debt/Equity ratio of 0.15. This is a healthy value indicating a solid balance between debt and equity.
KRR has a worse Debt to Equity ratio (0.15) than 68.96% of its industry peers.
Although KRR does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

		Industry Rank	Sector Rank
Debt/Equity	0.15
Debt/FCF	1.63
Altman-Z	4

ROIC/WACC0.76

WACC7.85%

2.3 Liquidity

A Current Ratio of 1.79 indicates that KRR should not have too much problems paying its short term obligations.
With a Current ratio value of 1.79, KRR perfoms like the industry average, outperforming 46.81% of the companies in the same industry.
A Quick Ratio of 1.33 indicates that KRR should not have too much problems paying its short term obligations.
KRR has a Quick ratio of 1.33. This is comparable to the rest of the industry: KRR outperforms 44.56% of its industry peers.
The current and quick ratio evaluation for KRR is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

		Industry Rank	Sector Rank
Current Ratio	1.79
Quick Ratio	1.33

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

KRR shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 66.67%, which is quite impressive.
Measured over the past years, KRR shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -56.65% on average per year.
KRR shows a strong growth in Revenue. In the last year, the Revenue has grown by 24.81%.
Measured over the past years, KRR shows a very strong growth in Revenue. The Revenue has been growing by 26.45% on average per year.

EPS 1Y (TTM)66.67%

EPS 3Y-56.65%

EPS 5YN/A

EPS Q2Q%133.33%

Revenue 1Y (TTM)24.81%

Revenue growth 3Y20.3%

Revenue growth 5Y26.45%

Sales Q2Q%19.35%

3.2 Future

Based on estimates for the next years, KRR will show a very strong growth in Earnings Per Share. The EPS will grow by 60.52% on average per year.
KRR is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 19.87% yearly.

EPS Next Y193.38%

EPS Next 2Y102.98%

EPS Next 3Y60.52%

EPS Next 5YN/A

Revenue Next Year38.22%

Revenue Next 2Y24.68%

Revenue Next 3Y19.87%

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 26.80, which means the current valuation is very expensive for KRR.
89.99% of the companies in the same industry are more expensive than KRR, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.25. KRR is around the same levels.
With a Price/Forward Earnings ratio of 7.74, the valuation of KRR can be described as very cheap.
KRR's Price/Forward Earnings ratio is rather cheap when compared to the industry. KRR is cheaper than 93.49% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, KRR is valued rather cheaply.

		Industry Rank	Sector Rank
PE	26.8
Fwd PE	7.74

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of KRR indicates a rather cheap valuation: KRR is cheaper than 91.24% of the companies listed in the same industry.
93.37% of the companies in the same industry are more expensive than KRR, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	30.36
EV/EBITDA	8.95

4.3 Compensation for Growth

KRR's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
KRR has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as KRR's earnings are expected to grow with 60.52% in the coming years.