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

We assign a fundamental rating of 7 out of 10 to KRR. KRR was compared to 820 industry peers in the Metals & Mining industry. KRR scores excellent points on both the profitability and health parts. This is a solid base for a good stock. KRR has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination! 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.
KRR had a positive operating cash flow in the past year.
Of the past 5 years KRR 4 years were profitable.
In the past 5 years KRR always reported a positive cash flow from operatings.

1.2 Ratios

KRR's Return On Assets of 2.29% is amongst the best of the industry. KRR outperforms 89.24% of its industry peers.
KRR has a better Return On Equity (3.78%) than 89.86% of its industry peers.
KRR's Return On Invested Capital of 5.99% is amongst the best of the industry. KRR outperforms 94.49% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital 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.
With an excellent Operating Margin value of 14.25%, KRR belongs to the best of the industry, outperforming 92.62% of the companies in the same industry.
KRR's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 40.26%, KRR belongs to the top of the industry, outperforming 94.87% of the companies in the same industry.
In the last couple of years the Gross Margin of KRR has grown nicely.

		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.
The number of shares outstanding for KRR has been increased compared to 1 year ago.
Compared to 1 year ago, KRR has a worse debt to assets ratio.

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.
With a decent Altman-Z score value of 4.00, KRR is doing good in the industry, outperforming 64.71% of the companies in the same industry.
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.
With an excellent Debt to FCF ratio value of 1.63, KRR belongs to the best of the industry, outperforming 94.87% of the companies in the same industry.
A Debt/Equity ratio of 0.15 indicates that KRR is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.15, KRR is doing worse than 68.96% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for KRR, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		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.
KRR has a Quick Ratio of 1.33. This is a normal value and indicates that KRR is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.33, KRR is in line with its industry, outperforming 44.56% of the companies in the same 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

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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.
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

KRR is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 60.52% yearly.
The Revenue is expected to grow by 19.87% on average over the next years. This is quite good.

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

With a Price/Earnings ratio of 26.80, KRR can be considered very expensive at the moment.
KRR's Price/Earnings ratio is rather cheap when compared to the industry. KRR is cheaper than 89.99% of the companies in the same industry.
When comparing the Price/Earnings ratio of KRR to the average of the S&P500 Index (27.21), we can say KRR is valued inline with the index average.
KRR is valuated cheaply with a Price/Forward Earnings ratio of 7.74.
93.49% of the companies in the same industry are more expensive than KRR, based on the Price/Forward Earnings ratio.
KRR is valuated cheaply when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.

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

		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.
The excellent profitability rating of KRR 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.