American Vanguard Corp (NYSE: AVD)

Sector: Basic Materials Industry: Agricultural Inputs CIK: 0000005981
Market Cap 145.33 Mn
P/B 0.66
P/E -1.30
P/S 0.27
ROIC (Qtr) -18.39
Div Yield % 0.00
Rev 1y % (Qtr) 0.85
Total Debt (Qtr) 200.59 Mn
Debt/Equity (Qtr) 0.91
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About

American Vanguard Corporation (AVD), a prominent player in the chemical industry, operates through its subsidiaries such as AMVAC Chemical Corporation, GemChem, Inc., Envance Technologies, LLC, TyraTech Inc., OHP Inc., and AgriCenter. The company specializes in the production of chemical, biological, and biorational solutions for agricultural, commercial, and consumer uses. These solutions encompass a wide range of products including insecticides, fungicides, herbicides, soil health enhancers, plant nutrition, molluscicides, growth regulators, soil...

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Investment thesis

Bull case

  • Healthy cash reserves of 16.80M provide 2.72x coverage of short-term debt 6.18M, demonstrating strong liquidity position and minimal refinancing risk.
  • Tangible assets of 490.57M provide exceptional 15.71x coverage of deferred revenue 31.23M, showing strong service capability backing.
  • Robust free cash flow of 4.55M exceeds capital expenditure of 2.08M by 2.19x, indicating strong organic growth funding capability.
  • R&D investment of 24.32M represents healthy 0.78x of deferred revenue 31.23M, indicating strong future innovation pipeline.
  • Retained earnings of 183.21M represent substantial 0.83x of equity 220.99M, indicating strong internal capital generation.

Bear case

  • Operating cash flow of 6.63M barely covers its investment activities of (2.28M), with a coverage ratio of -2.90, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 16.80M against inventory of 199M, the 0.08 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (2.28M) provide weak support for R&D spending of 24.32M, which is -0.09x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 6.63M provides insufficient coverage of deferred revenue obligations of 31.23M, which is 0.21x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 6.63M shows concerning coverage of stock compensation expenses of 2.27M, with a 2.92 ratio indicating potential earnings quality issues.

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Agricultural Inputs
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CTVA Corteva, Inc. 51.66 Bn 47.22 2.97 2.58 Bn
2 NTR Nutrien Ltd. 33.97 Bn 18.78 1.28 14.18 Bn
3 CF CF Industries Holdings, Inc. 24.01 Bn 17.27 5.06 3.40 Bn
4 MOS Mosaic Co 11.47 Bn 12.98 1.20 4.57 Bn
5 ICL ICL Group Ltd. 7.35 Bn 19.93 1.04 2.68 Bn
6 SMG Scotts Miracle-Gro Co 4.04 Bn 45.09 1.21 2.53 Bn
7 FMC Fmc Corp 1.81 Bn 1.37 0.40 4.58 Bn
8 UAN Cvr Partners, Lp 1.13 Bn 13.61 1.94 0.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.52 0.81
EV to Cash from Ops. EV/CFO 51.20 10.02
EV to Debt EV to Debt 1.69 10.62
EV to EBIT EV/EBIT -4.25 46.09
EV to EBITDA EV/EBITDA -5.98 7.11
EV to Free Cash Flow [EV/FCF] EV/FCF 74.62 9.01
EV to Market Cap EV to Market Cap 2.34 1.48
EV to Revenue EV/Rev 0.64 1.04
Price to Book Value [P/B] P/B 0.66 0.69
Price to Earnings [P/E] P/E -1.30 13.22
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 1.10
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 28.62
Dividend per Basic Share Div per Share (Qtr) 0.00 1.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.06
Interest Coverage Int. cover (Qtr) -4.51 3.21
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 77.60 10,378.95
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 41.37 20.72
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -0.75
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -490.49 -98.96
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -2,342.12 -212.56
EBIT Growth (1y) % EBIT 1y % (Qtr) -321.00 -25.56
EBT Growth (1y) % EBT 1y % (Qtr) -176.24 257.67
EPS Growth (1y) % EPS 1y % (Qtr) -290.20 -169.70
FCF Growth (1y) % FCF 1y % (Qtr) -91.93 -105.41
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -15.98 14.76
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.81 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.00
Cash Ratio Cash Ratio (Qtr) 0.07 0.66
Current Ratio Curr Ratio (Qtr) 1.77 1.99
Debt to Equity Ratio Debt/Equity (Qtr) 0.91 0.09
Interest Cover Ratio Int Coverage (Qtr) -4.51 3.21
Times Interest Earned Times Interest Earned (Qtr) -4.51 3.21
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -11.30 -162.19
EBIT Margin % EBIT Margin % (Qtr) -15.06 -175.66
EBT Margin % EBT Margin % (Qtr) -18.40 -244.07
Gross Margin % Gross Margin % (Qtr) 24.10 32.49
Net Profit Margin % Net Margin % (Qtr) -21.10 -252.26