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

KRR gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 820 industry peers in the Metals & Mining industry. Both the health and profitability get an excellent rating, making KRR a very profitable company, without any liquidiy or solvency issues. An interesting combination arises when we look at growth and value: KRR is growing strongly while it also seems undervalued. With these ratings, KRR could be worth investigating further for value and growth and quality investing!.

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1. Profitability

1.1 Basic Checks

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

1.2 Ratios

KRR has a better Return On Assets (2.29%) than 89.24% of its industry peers.
With an excellent Return On Equity value of 3.78%, KRR belongs to the best of the industry, outperforming 89.86% of the companies in the same industry.
KRR has a better Return On Invested Capital (5.99%) than 94.49% of its industry peers.
The Average Return On Invested Capital over the past 3 years for KRR is significantly below the industry average of 12.04%.
The last Return On Invested Capital (5.99%) for KRR is above the 3 year average (5.90%), which is a sign of increasing profitability.

		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

The Profit Margin of KRR (3.22%) is better than 92.12% of its industry peers.
In the last couple of years the Profit Margin of KRR has declined.
Looking at the Operating Margin, with a value of 14.25%, KRR belongs to the top of the industry, outperforming 92.62% of the companies in the same industry.
In the last couple of years the Operating Margin of KRR has grown nicely.
The Gross Margin of KRR (40.26%) is better than 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

KRR has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for KRR has been increased compared to 1 year ago.
The debt/assets ratio for KRR is higher compared to a year ago.

2.2 Solvency

An Altman-Z score of 4.00 indicates that KRR is not in any danger for bankruptcy at the moment.
KRR's Altman-Z score of 4.00 is fine compared to the rest of the industry. KRR outperforms 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.
The Debt to FCF ratio of KRR (1.63) is better 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

KRR has a Current Ratio of 1.79. This is a normal value and indicates that KRR is financially healthy and should not expect problems in meeting its short term obligations.
KRR's Current ratio of 1.79 is in line compared to the rest of the industry. KRR outperforms 46.81% of its industry peers.
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.
KRR does not score too well on the current and quick ratio evaluation. However, as it has 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

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 66.67% over the past year.
KRR shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -56.65% yearly.
Looking at the last year, KRR shows a very strong growth in Revenue. The Revenue has grown by 24.81%.
KRR shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 26.45% yearly.

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.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

KRR is valuated quite expensively with a Price/Earnings ratio of 26.80.
Based on the Price/Earnings ratio, KRR is valued cheaply inside the industry as 89.99% of the companies are valued more expensively.
KRR is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 7.74, which indicates a rather cheap valuation of KRR.
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.
KRR's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.83.

		Industry Rank	Sector Rank
PE	26.8
Fwd PE	7.74

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, KRR is valued cheaply inside the industry as 91.24% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, KRR is valued cheaper than 93.37% of the companies in the same industry.

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

4.3 Compensation for Growth

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