A strong performer from today's morning trading session is Teck Resources, whose shares rose 3.3% to $46.27 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
The Market May Be Undervaluing Teck Resources's Earnings and Assets:
Teck Resources Limited engages in exploring for, acquiring, developing, and producing natural resources in Asia, Europe, and North America. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 25.19 and an average price to book (P/B) ratio of 3.17. In contrast, Teck Resources has a trailing 12 month P/E ratio of 22.6 and a P/B ratio of 0.91.
When we divide Teck Resources's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -4.92. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Generally Positive Cash Flows but a Declining EPS Growth Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $12,564 | $11,934 | $8,948 | $12,766 | $17,316 | $15,011 |
| Gross Margins | 37% | 28% | 15% | 41% | 49% | 34% |
| Net Margins | 25% | -5% | -11% | 23% | 19% | 15% |
| Net Income (M) | $3,145 | -$588 | -$944 | $2,915 | $3,298 | $2,308 |
| Earnings Per Share | $5.34 | -$1.08 | -$1.62 | $5.31 | $6.19 | $4.59 |
| EPS Growth | n/a | -120.22% | -50.0% | 427.78% | 16.57% | -25.85% |
| Free Cash Flow (M) | $4,438 | $3,484 | $1,563 | $4,738 | $7,983 | $4,084 |
| Total Debt (M) | $5,181 | $4,133 | $6,140 | $7,161 | $6,551 | $6,019 |
| Net Debt / EBITDA | 0.55 | 2.12 | 9.48 | 0.89 | 0.54 | 0.84 |
| Current Ratio | 2.11 | 1.62 | 1.23 | 1.62 | 1.41 | 1.1 |
