Is Sigma Lithium growth trend slowing down?
 | By Vlad Skutelnik | Macroaxis Story |
Sigma Lithium Resources, a company operating in the Metals & Mining sector, has been facing significant financial challenges. The company reported a net loss from continuing operations of $127.2M and a negative EBITDA of $128.1M, indicating a weak operational performance. The company's free cash flow also remained negative at $133.1M, which could potentially affect its ability to invest in growth opportunities. Despite these financial challenges, Sigma Lithium Resources maintains a robust balance sheet with a high current ratio of 9.15X and net working capital of $77.1M. The company's total assets amount to $308.9M, with cash and short-term investments constituting a significant portion at $96.4M. Interestingly, the company has a negative net debt of $92.7M, suggesting that it has more cash than total debt. The company's management has been focusing on controlling costs, as indicated by the relatively low cost of revenue at $102K. However, selling, general and administrative expenses are significantly high at $127M, contributing to the overall operating loss of $121.2M. Sigma Lithium Resources has a market capitalization of $4.4B and a book value per share of 1.75X, which results in a price-to-book ratio of 27.0137. This suggests that the company's stock is trading at a premium compared to its book value. Given the company's financial performance and valuation, potential investors should exercise caution. The company's stock has a beta of 0.1595, indicating a lower volatility compared to the market. However, the company's probability of bankruptcy stands at a high 73.84%, which adds to the investment risk. In conclusion, while Sigma Lithium Resources has some positive financial indicators, its overall financial performance and high valuation might limit its investment potential. Investors should carefully consider these factors before making an investment decision. While many millennials are steering clear of the metals and mining sector, it's worthwhile to delve deeper into Sigma Lithium Resources and understand its current market trends. We will assess why we maintain our confidence in the prospect of a recovery. Is the company's valuation justified? We will explore Sigma Lithium Resources' perspective on valuation to provide a clearer viewpoint on whether to invest in this stock.
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Reviewed by Rifka Kats
Sigma Lithium Resources, currently valued at a substantial 3.95B, presents a compelling case for investors, despite a reported loss of 127.2M in net income from continuing operations. The company's robust current ratio of 9.15X, coupled with a healthy working capital of 77.05M, signifies strong short-term financial health. However, the high probability of bankruptcy at 73.84% and a negative return on equity of 0.69 could raise concerns about the company's future performance. Additionally, the company's price to book ratio stands at a staggering 27.01X, which could suggest overvaluation. Investors should weigh these factors carefully when considering an investment in Sigma Lithium Resources.
Progressive assessment
Sigma Lithium currently holds $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 advantage. The firm's current ratio stands at 8.97, indicating that it is sufficiently liquid and capable of meeting its financial obligations when they are due. While debt can aid Sigma Lithium until it encounters difficulties in repayment, either through new capital or free cash flow, it's important to note that if the company fails to meet its legal obligations to repay debt, shareholders could potentially lose everything. However, a more common scenario is when companies like Sigma Lithium Resources issue additional shares at discounted prices, diluting the holdings of existing shareholders. In such cases, debt can be a superior tool for Sigma to invest in growth at high rates of return. When evaluating Sigma Lithium's use of debt, it should always be considered in conjunction with cash and equity. One way to assess Sigma's asset utilization is to examine how much profit is generated for every dollar of assets it reports. Sigma Lithium Resources currently has a negative asset utilization 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 effectively utilizing each dollar of its assets. In other words, Sigma Lithium Resources' asset utilization reveals a discouraging operational efficiency for each dollar spent on its assets.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
Net Loss for the year was (127.21 M) with profit before overhead, payroll, taxes, and interest of 0. Sigma Lithium Earnings Before Interest Taxes and Depreciation Amortization EBITDA is quite stable at the moment. Moreover, Sigma Lithium Earnings before Tax is decreasing over the last 5 years. The latest value of Sigma Lithium Earnings before Tax is -130,557,632. Sigma Lithium Resources, a key player in the Other Industrial Metals & Mining industry, is currently under the microscope for its financial performance. Despite a substantial investment in property, plant, and equipment, which stands at a noteworthy $194.2M, the company has reported a net loss of $127.2M. This is reflected in the EPS Estimate for the current year, which is reported at a loss of $0.31, and the diluted EPS, also at a loss of $1.01. The company's book value is $1.749, while the price to book ratio is a high 27.0137, indicating a potentially overvalued stock.Sigma's operating income has also taken a hit, reporting a loss of $121.2M. Despite these figures, Sigma has maintained a healthy net working capital of $77.1M, suggesting that it can meet its short-term obligations. Sigma's current valuation stands at a hefty $3.95B, which may raise eyebrows considering its financial performance. The company's beta of 0.16 indicates a lower volatility compared to the market, which may appeal to risk-averse investors. However, the high probability of bankruptcy at 73.84% is a red flag that cannot be ignored. In conclusion, while Sigma Lithium Resources has significant assets and a stable working capital, its negative income and high valuation may deter potential investors. The company's management needs to address these issues to improve its financial health and attract investment. .
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