Should I rely on Sigma Lithium management in August 2023?
 | By Aina Ster | Macroaxis Story |
Sigma Lithium Resources, a NASDAQ-listed company, demonstrated mixed performance in August 2023. Despite a net loss of $127.2M and negative EBITDA of $128.1M, the company maintained a strong current ratio of 9.15X, indicating good short-term financial health. Sigma's end period cash flow stood at $96.4M, while its total assets amounted to $308.91M. The company's capital expenditures were high at $127.6M, reflecting its investment in growth and expansion. Sigma's total operating expenses were $128M, with selling, general and administrative expenses accounting for the bulk of this figure at $127M. The company's market capitalization was $4.3B, and its enterprise value.was $3.9B. However, the company's high probability of bankruptcy at 73.84% and a beta of 0.1595 indicate a high level of risk. Despite these challenges, Sigma's stock appears to be undervalued, with a Wall Street target price of $37.36 compared to a 200-day moving average of $34.1951. With 59.06% of shares owned by institutions and a short ratio of 5.28, the stock could see significant upward movement if the company can improve its financial performance. As many millennials are shying away from the metals and mining sector, it seems prudent to delve deeper into Sigma Lithium Resources and attempt to comprehend its current market trends. We will assess whether Sigma Lithium shares are reasonably priced as we approach August. Is the company's valuation justified? We will explore Sigma Lithium Resources' perspective on valuation to provide you with a clearer outlook on whether to take a position in this stock.
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Reviewed by Rifka Kats
Sigma Lithium currently has $3.67 million in liabilities, with a Debt to Equity (D/E) ratio of 0.0. This suggests that Sigma Lithium may not be leveraging borrowing to its full potential. One way to assess Sigma's asset utilization is by examining the profit generated for every dollar of reported assets. Sigma Lithium Resources has a negative asset utilization rate of -0.32%, losing $0.003176 for each dollar of assets held by the company. This poor asset utilization suggests that the company is not efficiently using each dollar of its assets. In other words, Sigma Lithium Resources' asset utilization indicates a lack of efficiency in its operations for each dollar spent on its assets.
Progressive assessment
Sigma Lithium Resources, a Metals & Mining industry player, has shown a concerning financial performance in August 2023. The company reported a net loss with an EPS Estimate of -0.31 for the current year and a Return On Equity of -0.69. Despite a high Current Ratio of 9.15X, indicating sufficient liquidity, the company has a negative Free Cash Flow of -133.1M, which raises concerns about its ability to finance operations. Furthermore, the company's high Probability Of Bankruptcy at 73.84% suggests potential financial distress. However, the company's strong Book Value Per Share at 1.75X and a low Debt to Equity ratio of 0.001% may provide some solace to investors. We determine the current worth of Sigma Lithium Resources using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Sigma Lithium Resources based exclusively on its fundamental and basic technical indicators. By analyzing Sigma Lithium's financials, quarterly and monthly indicators, and related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Sigma Lithium's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Sigma Lithium. We calculate exposure to Sigma Lithium's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Sigma Lithium's related companies.
Sigma Lithium Resources Investment Alerts
Sigma investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Sigma Lithium Resources performance across your portfolios.Please check all investment alerts for SigmaSigma Lithium Valuation Ratios as Compared to Competition
Our valuation model uses many indicators to compare Sigma value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Sigma Lithium competition to find correlations between indicators driving the intrinsic value of Sigma.Sigma Lithium Gross Profit
Sigma Lithium Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Sigma Lithium previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Sigma Lithium Gross Profit growth over the last 10 years. Please check Sigma Lithium's gross profit and other fundamental indicators for more details.
Breaking it down
The latest indifference towards the small price fluctuations of Sigma Lithium created some momentum for institutional investors.as it was traded today as low as 39.16 and as high as 40.07 per share. The company management teams did not add any value to Sigma Lithium Resources investors in June. However, most investors can still diversify their portfolios with Sigma Lithium to hedge their inherited risk against high-volatility market scenarios. The stock standard deviation of daily returns for 90 days investing horizon is currently 2.85. The current volatility is consistent with the ongoing market swings in June 2023 as well as with Sigma Lithium Resources unsystematic, company-specific events. Sigma Lithium Earnings before Tax is decreasing over the last 5 years. Moreover, Sigma Lithium Free Cash Flow is quite stable at the moment. Sigma Lithium Resources, traded on NASDAQ, has shown some interesting financial dynamics in August 2023. The company's net income stands at a loss of $127.2 million, with a significant EBITDA loss of $128.1 million.This is largely driven by high total operating expenses of $128 million, of which selling, general and administrative expenses account for $127 million. Despite the losses, the company's shares float at 49.5 million, with 59.06% held by institutions. This indicates a considerable level of confidence in the company's long-term prospects. The stock's 52-week high stands at $43.18, slightly above its 50-day moving average of $39.29. The company's book value per share is 1.75X, leading to a high price to book ratio of 27.01X. This suggests that the market values the company's assets highly, despite the negative earnings per share of $0.93. Sigma Lithium Resources' net debt stands at a negative $92.7 million, indicating a strong financial position. The company's total assets amount to $308.9 million, against liabilities and stockholders' equity of the same amount. Despite the challenging financial performance, the company's management seems to be steering the ship with a clear vision, as indicated by the positive change in working capital of $15.3 million. .
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