Methanex Corp (NASDAQ: MEOH)

Sector: Basic Materials Industry: Chemicals CIK: 0000886977
Market Cap 4.41 Bn
P/B 3.52
P/E 45.97
P/S 2.24
ROIC (Qtr) 20.07
Div Yield % 1.68
Rev 1y % (Qtr) -0.79
Total Debt (Qtr) 3.64 Bn
Debt/Equity (Qtr) 1.42
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About

Investment thesis

Bull case

  • Healthy cash reserves of 413.38M provide 2.27x coverage of short-term debt 182.30M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.06B provides exceptional 17.44x coverage of minority interest expenses 60.61M, showing strong core operations.
  • Robust free cash flow of 927.71M exceeds capital expenditure of 129.46M by 7.17x, indicating strong organic growth funding capability.
  • Operating cash flow of 1.06B provides strong 54.48x coverage of stock compensation 19.40M, indicating sustainable incentive practices.
  • Robust tangible asset base of 7.53B provides 9.58x coverage of working capital 785.57M, indicating strong operational backing.

Bear case

  • Operating cash flow of 1.06B barely covers its investment activities of (1.35B), with a coverage ratio of -0.78, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.06B provides thin coverage of dividend payments of (51.71M) with a -20.44 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 477.24M show weak coverage of depreciation charges of 409.77M, with a 1.16 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 1.06B barely covers operating expenses of (70.69M) with a -14.95 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Tax assets of 23.87M provide limited offset against tax liabilities of 327.68M, which is 0.07x, indicating potential future cash flow pressure from tax obligations.

Peer comparison

Companies in the Chemicals
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DOW Dow Inc. 22.27 Bn -8.49 0.56 19.60 Bn
2 CE Celanese Corp 6.07 Bn 3.05 0.57 13.13 Bn
3 MEOH Methanex Corp 4.41 Bn 45.97 2.24 3.64 Bn
4 OLN OLIN Corp 3.95 Bn 50.79 0.65 3.30 Bn
5 HUN Huntsman CORP 2.92 Bn 8.95 0.39 2.40 Bn
6 REX REX AMERICAN RESOURCES Corp 1.12 Bn 22.21 1.72 0.02 Bn
7 TROX Tronox Holdings plc 1.06 Bn -9.74 0.40 3.46 Bn
8 GPRE Green Plains Inc. 0.89 Bn -7.32 0.42 0.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.69 0.76
EV to Cash from Ops. EV/CFO 28.41 10.63
EV to Debt EV to Debt 1.43 4.16
EV to EBIT EV/EBIT 32.18 -392.22
EV to EBITDA EV/EBITDA 17.64 11.31
EV to Free Cash Flow [EV/FCF] EV/FCF 76.27 18.26
EV to Market Cap EV to Market Cap 1.17 1.76
EV to Revenue EV/Rev 2.64 4.23
Price to Book Value [P/B] P/B 3.52 1.69
Price to Earnings [P/E] P/E 45.97 -53.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.13 -12.67
Dividend Payout Ratio % Div Payout % (Qtr) 23.30 17.68
Dividend per Basic Share Div per Share (Qtr) 0.74 0.50
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 6.17 1,007.72
Interest Coverage Int. cover (Qtr) 2.25 -82.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 35.04 22.09
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -19.12 4.03
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -8.48
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 47.49 -121.97
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 52.96 -25.84
EBIT Growth (1y) % EBIT 1y % (Qtr) 75.25 -147.36
EBT Growth (1y) % EBT 1y % (Qtr) 66.61 -143.26
EPS Growth (1y) % EPS 1y % (Qtr) 40.27 -108.77
FCF Growth (1y) % FCF 1y % (Qtr) 101.77 -91.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 105.99 0.31
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.47 0.63
Cash Payout Ratio Cash Payout (Qtr) 0.04 0.07
Cash Ratio Cash Ratio (Qtr) 0.57 1.02
Current Ratio Curr Ratio (Qtr) 2.09 2.84
Debt to Equity Ratio Debt/Equity (Qtr) 1.42 1.19
Interest Cover Ratio Int Coverage (Qtr) 2.25 -82.93
Times Interest Earned Times Interest Earned (Qtr) 2.25 -82.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 24.90 -96.08
EBIT Margin % EBIT Margin % (Qtr) 13.37 -110.82
EBT Margin % EBT Margin % (Qtr) 7.42 -114.07
Gross Margin % Gross Margin % (Qtr) 14.40 10.84
Net Profit Margin % Net Margin % (Qtr) 6.00 -117.97