The stock of United States Antimony (AMEX:UAMY, 30-year Financials) shows every sign of being significantly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $0.95 per share and the market cap of $97.7 million, United States Antimony stock shows every sign of being significantly overvalued. GF Value for United States Antimony is shown in the chart below.
Because United States Antimony is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. United States Antimony has a cash-to-debt ratio of 3.58, which is in the middle range of the companies in Metals & Mining industry. The overall financial strength of United States Antimony is 7 out of 10, which indicates that the financial strength of United States Antimony is fair. This is the debt and cash of United States Antimony over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. United States Antimony has been profitable 2 over the past 10 years. Over the past twelve months, the company had a revenue of $5.2 million and loss of $0.049 a share. Its operating margin is -57.04%, which ranks worse than 77% of the companies in Metals & Mining industry. Overall, the profitability of United States Antimony is ranked 2 out of 10, which indicates poor profitability. This is the revenue and net income of United States Antimony over the past years:
One of the most important factors in the valuation of a company is growth. Long-term stock performance is closely correlated with growth according to GuruFocus research. Companies that grow faster create more value for shareholders, especially if that growth is profitable. The average annual revenue growth of United States Antimony is -22%, which ranks worse than 80% of the companies in Metals & Mining industry. The 3-year average EBITDA growth is -220.8%, which ranks in the bottom 10% of the companies in Metals & Mining industry.
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, United States Antimony's ROIC was -24.39, while its WACC came in at 7.23. The historical ROIC vs WACC comparison of United States Antimony is shown below:
In conclusion, the stock of United States Antimony (AMEX:UAMY, 30-year Financials) is estimated to be significantly overvalued. The company's financial condition is fair and its profitability is poor. Its growth ranks in the bottom 10% of the companies in Metals & Mining industry. To learn more about United States Antimony stock, you can check out its 30-year Financials here.
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