|Market Growth LT||null|
|Market Growth ST||A+|
The Company's Growth Indicators are Very Strong Across the Board Sugesting Market Share Gains
Centamin plc recently reported very strong growth in quarterly revenue on a year to year basis, with total sales of $139.34 million for the quarter ended May 15, 2013, 58.89% higher than the $87.70 million reported in the same quarter a year earlier; including this latest number, its 12-month trailing revenue was $0.00 million. We normally compare this number to the revenue booked by the company in the 12 months ended either three or two years ago but in this case we don't have sales figures going that far back and so we're unable to make this comparison. Its profit growth was excellent last quarter when compared to the year earlier period. Our analysis of long term profit growth, which is based on rolling four quarter periods, was limited to a two year comparison because publicly available financials don't go far enough for our normal three year comparison. Centamin plc recently reported that its First quarter profit grew 33.38% to $72.50 million from a year earlier when it had earned $54.36 million (excluding extraordinary items) in the comparable period; also including last quarter, the company lost/earned $220.51 million in the last 12 months, which cannot be compared to the equivalent period ended either two or three years ago given a lack of necessary data. The company's ongoing margin contraction accelerated during its most recent quarter in which its EBITDA, operating and net margins fell an average of -9.53% from the year earlier period.
Investors welcomed the company's First quarter results announced May 15, 2013, with earnings coming in line with the street's estimates, sending the stock higher 10.91% from the day before to the day after the announcement. This suggests the company's report offered bright prospects for future earnings growth. It has now exceeded the consensus earnings estimate by an average of 2.78% in its last six reported quarters, a favorable indicator for the stock.
|Price/Cash Flow Ratio||A+|
The Stock's Valuation is Attractive Based on the Company's Overall Financial Strength
Shares of Centamin plc are trading currently at 3.22 times trailing 12-month earnings. This P/E ratio represents a 92.34% discount to the MarketGrader-calculated "optimum" P/E ratio of 48.32, which is based on the company's two-year EPS growth rate. According to this calculation, which looks at the company's growth across rolling 12-month periods, Centamin plc's earnings per share have grown at an impressive annualized rate of 69.26% in the last two years. This growth has resulted in strong financial performance, evidenced by the company's Profitability grade. For this to continue, it must reverse its recent margin slide soon. Currently the stock also has a forward P/E of 3.70, which interestingly enough is higher than its trailing P/E but lower than the S&P 500's forward P/E of 15.20. Investors therefore see more value in the company's future earnings but not as much as they see in the market in general; coupled with the company's strong fundamentals, this situation could represent an interesting but risky opportunity, meaning short term volatility with the possibility of handsome returns in the long term.
Investors are currently valuing Centamin plc at 0.60 times its total book value per share, which either undervalues the company's ongoing business or anticipates a significant asset write-down. Normally we would calculate the company's price to tangible book value (which includes intangible assets such as goodwill), but in this case Centamin plc didn't report any intangible assets in its most recent balance sheet. At the current price of $0.61 the stock is valued at 2.59 times the cash flow generated by the company in the last four quarters, or $0.24 per share; this values the company's ongoing business very favorably considering the strength of its overall fundamentals. Its shares also trade at 1.41 times its trailing 12-month sales, a small 99.90% discount to the Precious Metals industry average price to sales ratio of 1238.64. Our final value indicator looks at the relationship between the company's current market capitalization and its operating profits after deducting taxes. By this measure Centamin plc is priced very attractively with a total value of $638.81 million , only 7.73 times higher than its latest quarterly net income plus depreciation.
|Return on Equity||B-|
|Quality of Revenues||A+|
Company's Operations Are Very Profitable and Indicate a Solid Business Environment
Centamin plc has a strong 12-month trailing profitability record based on solid returns on shareholder equity, operating margins that exceed its peer group average and a remarkable net profit margin. The $220.51 million net profit earned by the company in the last four quarters was equivalent to 46.21% of total sales. The average operating margin for the Precious Metals industry was 3.43% during the same period, 1312.14% below the company's 48.50%. While Centamin plc's 19.93% return on equity is solid--based on 12-month trailing earnings--it represents a slowdown from the year-earlier period's return on equity of 20.77%. Our system looks at this ratio in an attempt to measure management's efficiency in rewarding investors in the company's common stock.
The company has no debt, which gives it plenty of room to find capital if necessary in light of the recent downturn in its numbers. However, it is still very profitable and nothing currently indicates it would need to take such a step. Centamin plc's core earnings in the last twelve months grew moderately from the twelve months ended a year earlier. The company's EBITDA for the most recent period was $275.53 million, or 28.55% above the $214.34 million earned from its core operations in the prior period. EBITDA is used by MarketGrader to measure the company's true earnings power since it includes interest expenses, income taxes, depreciation and amortization, all non-operating expenses, which are nevertheless accounted for in other parts of our analysis that look at EPS gains and net income.
|Cash Flow Growth||A+|
|Debt/Cash Flow Ratio||A+|
|Interest Cov. Capacity||A+|
Outstanding Cash Flow Indicators Show the Company Is Managed Smartly and in the Best Interest of its Shareholders
Centamin plc's cash flow grew considerably in its latest quarter to $79.80 million, a 86.79% increase from $42.72 million reported in the year earlier period. This growth seems to be accelerating considering that in the last twelve months the company's cash flow was 35.04% higher than the twelve months ended a year ago, a nice increase but quite lower than the current pace. This upward trend should boost its margins and overall profitability in the next few quarters. The company clearly has very strong liquidity having no debt to finance, $134.40 million in cash on hand as of last quarter and a business that generated $138.65 million in earnings before interest, taxes, depreciation and amortization in the same period. This affords it significant flexibility to take on debt if it wanted to pursue new growth opportunities such as an acquisition. Centamin plc's cash on hand fell during the last year to $134.40 million last quarter from $138.65 million in the year earlier period, a 3.07% drop. The company still has no debt.
According to our Economic Value indicator, which measures the company's return to shareholders after accounting for its costs of capital as well as its operating costs, Centamin plc's results were very solid last year. The company had $1.11 billion in total invested capital as of its most recently reported quarter; this includes only all forms of equity since it carries no debt. And based on its 12-month trailing operating income the company generated a 20.91% return on that capital over the same period. Its after tax cost of equity in the last year was 10.42%, which should be seen as the opportunity cost of investing in Centamin plc's shares. After deducting this cost from its return on investment the result is 10.49% in economic value added, or EVA, the true economic profit generated by the company last year for its shareholders. Centamin plc does not pay a dividend and hasn't done so within at least the last five years.