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

Taking everything into account, KRR scores 7 out of 10 in our fundamental rating. KRR was compared to 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. KRR is evaluated to be cheap and growing strongly. This does not happen too often! These ratings would make KRR suitable 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.
KRR had positive earnings in 4 of the past 5 years.
In the past 5 years KRR always reported a positive cash flow from operatings.

1.2 Ratios

KRR has a better Return On Assets (2.29%) than 89.24% of its industry peers.
KRR's Return On Equity of 3.78% is amongst the best of 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.
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

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

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

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.
KRR has a debt to FCF ratio of 1.63. This is a very positive value and a sign of high solvency as it would only need 1.63 years to pay back of 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 Debt to Equity ratio of 0.15. This is in the lower half of the industry: KRR underperforms 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.
KRR has a Current ratio (1.79) which is comparable to the rest of the industry.
A Quick Ratio of 1.33 indicates that KRR should not have too much problems paying its short term obligations.
The Quick ratio of KRR (1.33) is comparable to the rest of the industry.
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

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.
The earnings per share for KRR have been decreasing by -56.65% on average. This is quite bad
Looking at the last year, KRR shows a very strong growth in Revenue. 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

The Earnings Per Share is expected to grow by 60.52% on average over the next years. This is a very strong growth
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

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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

The Price/Earnings ratio is 26.80, which means the current valuation is very expensive for KRR.
Based on the Price/Earnings ratio, KRR is valued cheaply inside the industry as 89.99% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of KRR to the average of the S&P500 Index (28.39), we can say KRR is valued inline with the index average.
Based on the 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.
The average S&P500 Price/Forward Earnings ratio is at 25.72. KRR is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	26.8
Fwd PE	7.74

4.2 Price Multiples

91.24% of the companies in the same industry are more expensive than KRR, based on the Enterprise Value to EBITDA ratio.
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.
KRR's earnings are expected to grow with 60.52% in the coming years. This may justify a more expensive valuation.