Alacer Gold Corp Financial Analysis

Alacer Gold Corp Financial Analysis - Alacer Gold Corp (ASR) was founded in 1993. One among the leading low-cost gold producer, it has been the apple of eyes for many investors. And why not? The data speaks much about the benefits the stock entails. With profound experience in producing gold at the minimum cost, Alacer makes it easy for investors to make the choice. The 80% interest of the company is through Gold Mine in Turkey operated by Anagold Madencilik. And, 20% is owned by Lidya Mining.

Although the stock is doing pretty good and is been successful in paying great returns to its investors, knowing a bit more about it won’t do any harm. Instead, it is always wise to perform the risk analysis even if the stock is at its peak. Who knows what it has for the future investments?

Alacer Gold Corp - Industry Comparison

Every company shares good number of competition when offering services to its consumers. And, people do compare all the alternatives before making the informed choice. When it comes to investing, the rule becomes a lot mandatory. Hence, here is a take on where it stands among its competitors.

This company have a P/S ratio akin to industry average. The price to book ratio is both lower than one which is less than the average industry rate. The low price to earnings ratio of 5.7 lower than industry average is again a good signal. Moreover, this company has a negative 5-Yr Revenues CAGR of -9.1%, a Med Operating Margin of 30.5% and a Debt to Equity Ratio of 0.3.

Looking at these measures, one can think that this company has a very good profitability and is probably undervalued. Who won’t be excited to buy a stock with operating margin greater than 30% and valuation ratios lower than industry average? However, negative Revenues Growth is again a red flag for investors. Thankfully, this alone cannot be the decisive indicator.

To find more reasons for trading with this stock, let’s check out few more parameters.

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Profitability

To check the profitability the company has made so far, let’s take a look at the below data. With 2 years tendency toward decreasing Costs of Goods Sold, increasing Gross Margin which is higher than 30%, operating margin greater than 20% and still growing, increasing EBT Margin (is above 10%) and Net Margin Greater than 40%, makes this company a profitable choice for investors.

Moreover, this company has a growing Return on Assets, Return on Equity, and Return on Invested Capital. This indicates that the profitability of assets, company investments and shareholders is increasing over time. Which is again a good signal for investing in this stock.

Additional to this, this company has a low and maintaining Asset Turnover Average which means that the company operations efficiency has remained stable so far. Hence, I see this company as a profitable investment till now.

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Growth

If you take the past performance too seriously, you may not be happy with the numbers below. According to the 3 years average and 5 years average since 2012, ASR has shown negative revenues, operating income and negative net income growth.

However, it is important to note that the values turned to positive by a huge percentage in 2017. This means that the company has been on its toes to cope up with the existing challenges. Hence, the results are obvious with the change revenues and income tendency for the last year and quarter.

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Cash-Flows

If you trust my instincts, Alacer Gold Corp is going to go a long route. It shows a very good tendency for cash-flows. The growing operating cash-flows by a huge % in 2017 compared to past years isn’t a piece of cake. The increasing Capital Expenditures as a % of Sales indicates that the company is futuristic and is investing funds for increasing future productivity.

This is the reason, company does not have current free cash-flows because it is investing a very large amount of money compared to the operating cash-flows.

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Financial Health

Alacer Gold Corp can meet its short term financial commitments with its current assets and will still be left with good amount of funds. This is because their current ratio is above 4 which is four times greater than the short-term liabilities. Moreover, the quick ratio is greater than 3. This means that its current assets without inventory are three times greater than current liabilities. Lastly, this company has a stable Financial Leverage Ratio and a low Debt to Equity Ratio a signal of a stable financial situation.

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Efficiency

Do not be overwhelmed by the highly varying yearly cash conversion cycle here. The tendency to stabilize between 100 and 60 days is enough to compensate for this huge variation. Their turnover ratios look stable and not very high. Hence, this company seems to be efficient in asset management.

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Valuation

ASR has a lower current valuation ratio than industry average along with their 5 years average. This is an indicator of increasing margins and lower valuation. Yep, you guessed it right. The stock is highly undervalued. Moreover, the Morningstar Analyst calculates a Forward P/E ratio very higher compared to the current one making it is a great opportunity for value investors.

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Valuation History

This company has a low valuation according to the past performances and decent yields. So, it can be an opportunity to Value Investors looking for a reversal (price increase relative to earnings, book value, sales or cash-flow).

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Quick Revision

Positive 

  • P/E ratio similar to industry average
  • Huge progress in terms of growth since 2017
  • Appreciable Cash Flows
  • Good Financial Health so far
  • Stable Turnover
  • Highly Undervalued

 

Negative

  • Negative net income growth for 3 years average and 5 years average since 2012
  • Negative Revenue Growth
  • Highly Varying Cash Conversion Cycle

 

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