Largo Inc. (NASDAQ: LGO)

Sector: Basic Materials Industry: Other Industrial Metals & Mining CIK: 0001400438
Market Cap 80.21 Mn
P/B 0.62
P/E -1.24
P/S 0.72
ROIC (Qtr) -60.05
Div Yield % 0.00
Rev 1y % (Qtr) 11.23
Total Debt (Qtr) 106.01 Mn
Debt/Equity (Qtr) 0.81

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 10.05M provides strong 10.06x coverage of stock compensation 999000, indicating sustainable incentive practices.
  • Strong tangible asset base of 320.68M provides 3.03x coverage of total debt 106M, indicating robust asset backing and low credit risk.
  • Tangible assets of 320.68M provide exceptional 19.38x coverage of deferred revenue 16.55M, showing strong service capability backing.
  • Strong operating cash flow of 10.05M provides 4.12x coverage of SG&A expenses 2.44M, showing efficient operational cost management.
  • Operating cash flow of 10.05M fully covers other non-current liabilities 2.82M by 3.57x, showing strong long-term stability.

Bear case

  • Operating cash flow of 10.05M barely covers its investment activities of (36.93M), with a coverage ratio of -0.27, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 8.23M against inventory of 58.71M, the 0.14 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (36.93M) provide weak support for R&D spending of 1.76M, which is -20.92x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 10.05M provides insufficient coverage of deferred revenue obligations of 16.55M, which is 0.61x, raising concerns about future service delivery capabilities.
  • Free cash flow of (28.05M) provides weak coverage of capital expenditures of 38.10M, with a -0.74 ratio suggesting additional external financing needs for growth initiatives.

Peer comparison

Companies in the Other Industrial Metals & Mining
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BHP BHP Group Ltd 162.30 Bn 17.99 3.17 -
2 TECK Teck Resources Ltd 24.54 Bn 27.27 3.23 3.67 Bn
3 MP MP Materials Corp. / DE 10.73 Bn -91.17 46.08 1.00 Bn
4 SKE Skeena Resources Ltd 3.07 Bn -36.58 0.00 0.04 Bn
5 MTRN MATERION Corp 2.85 Bn 87.35 2.45 0.53 Bn
6 VZLA Vizsla Silver Corp. 2.28 Bn -205.10 0.00 0.00 Bn
7 SGML Sigma Lithium Corp 1.76 Bn -65.03 15.16 0.12 Bn
8 ALM Almonty Industries Inc. 1.65 Bn -145.44 82.20 0.14 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.53 3.13
EV to Cash from Ops. EV/CFO 16.84 -51.74
EV to Debt EV to Debt 1.60 863.55
EV to EBIT EV/EBIT -4.54 -27.66
EV to EBITDA EV/EBITDA -9.02 566.13
EV to Free Cash Flow [EV/FCF] EV/FCF -6.04 -24.46
EV to Market Cap EV to Market Cap 2.11 0.59
EV to Revenue EV/Rev 1.51 42.69
Price to Book Value [P/B] P/B 0.62 10.60
Price to Earnings [P/E] P/E -1.24 -35.19
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -16.20
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 3.46
Dividend per Basic Share Div per Share (Qtr) 0.00 0.08
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -0.53
Interest Coverage Int. cover (Qtr) -3.23 51.59
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 4.09 -444.92
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -73.44 3,116.99
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.80
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -15.91 -69.51
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 32.59 20.12
EBIT Growth (1y) % EBIT 1y % (Qtr) 34.68 -24.32
EBT Growth (1y) % EBT 1y % (Qtr) 28.49 -92.39
EPS Growth (1y) % EPS 1y % (Qtr) -23.75 -31.76
FCF Growth (1y) % FCF 1y % (Qtr) 7.93 -5,473.04
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -79.44 9.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.35 0.13
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.05 5.35
Current Ratio Curr Ratio (Qtr) 0.50 6.87
Debt to Equity Ratio Debt/Equity (Qtr) 0.81 0.74
Interest Cover Ratio Int Coverage (Qtr) -3.23 51.59
Times Interest Earned Times Interest Earned (Qtr) -3.23 51.59
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -12.40 -684.18
EBIT Margin % EBIT Margin % (Qtr) -33.36 -696.12
EBT Margin % EBT Margin % (Qtr) -43.68 -788.27
Gross Margin % Gross Margin % (Qtr) -22.50 11.29
Net Profit Margin % Net Margin % (Qtr) -57.70 -790.78