Tronox Holdings PLC (TROX, Financial) has experienced a daily loss of -2.64% and a 3-month gain of 9.9%. With a Loss Per Share of 0.89, the question arises: is the stock modestly undervalued? This article aims to provide a thorough valuation analysis of Tronox Holdings PLC and its market position. We encourage you to read on for a detailed exploration of the company's intrinsic value.
Company Overview
Tronox Holdings PLC is a global leader in the manufacturing of TiO2 pigment. The company's operations span from mining titanium-bearing mineral sand to producing high-purity titanium chemicals. Its products are used in a variety of industries, including paints, coatings, plastics, paper, and printing ink. With a current stock price of $13.08 and a fair value (GF Value) of $14.77, it's crucial to delve deeper into the company's value and financial health.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded. If the stock price is significantly above or below the GF Value Line, it suggests the stock is overvalued or undervalued, respectively.
According to GuruFocus Value calculation, Tronox Holdings PLC (TROX, Financial) is modestly undervalued. With its current price of $13.08 per share and a market cap of $2 billion, the long-term return of its stock is likely to be higher than its business growth.
Link: These companies may deliever higher future returns at reduced risk.
Financial Strength
Investing in companies with low financial strength can result in permanent capital loss. Therefore, it's essential to review a company's financial strength before buying shares. Tronox Holdings PLC has a cash-to-debt ratio of 0.06, ranking worse than 92.22% of 1503 companies in the Chemicals industry. This suggests a poor balance sheet.
Profitability and Growth
Investing in profitable companies, especially those with consistent long-term profitability and high-profit margins, poses less risk. Tronox Holdings PLC has been profitable 3 over the past 10 years. Over the past twelve months, the company had a revenue of $3 billion and a Loss Per Share of $0.89. Its operating margin is 11.33%, ranking better than 70.98% of 1523 companies in the Chemicals industry.
Growth is a crucial factor in the valuation of a company. Companies that grow faster create more value for shareholders. The average annual revenue growth of Tronox Holdings PLC is 5.2%, ranking worse than 65.26% of 1445 companies in the Chemicals industry. The 3-year average EBITDA growth is 17.1%, ranking better than 62.38% of 1337 companies in the Chemicals industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) is another way to determine its profitability. For the past 12 months, Tronox Holdings PLC's ROIC is -4.07, and its WACC is 7.53.
Conclusion
In conclusion, Tronox Holdings PLC (TROX, Financial) stock is estimated to be modestly undervalued. The company's financial condition is poor, but its profitability is fair. Its growth ranks better than 62.38% of 1337 companies in the Chemicals industry. To learn more about Tronox Holdings PLC stock, you can check out its 30-Year Financials here.
To find out the high-quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
