Long-established in the Consumer Packaged Goods industry, Planet Green Holdings Corp (PLAG, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 9.28%, juxtaposed with a three-month change of 47.41%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Planet Green Holdings Corp.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 4/10
- 2. Profitability rank: 3/10
- 3. Growth rank: 3/10
- 4. GF Value rank: 4/10
- 5. Momentum rank: 1/10
Based on the above method, GuruFocus assigned Planet Green Holdings Corp the GF Score of 53 out of 100, which signals poor future outperformance potential.
Understanding Planet Green Holdings Corp's Business
Planet Green Holdings Corp is a diversified technology and consumer products company with a presence in North America and China. The company operates in three segments: Cyan brick tea, black tea, and green tea production in China; research, development, manufacture, and sale of chemical products including formaldehyde, urea formaldehyde adhesive, methylal, ethanol fuel, fuel additives and clean fuel in China; and development and operation of a demand-side platform which empowers buyers of advertising to manage and optimize their digital advertising across different real-time bidding networks in North America and China. With a market cap of $52.62 million and sales of $30.34 million, the company's operating margin stands at -16.78%.
Financial Strength Breakdown
Planet Green Holdings Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 0, which positions it worse than 0% of 1359 companies in the Consumer Packaged Goods industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just -3.75, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.19 indicates a struggle in handling existing debt levels.
Profitability Breakdown
Planet Green Holdings Corp's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years ((-32,296.00%)), as shown by the following data: 2018: -8.55; 2019: -27.40; 2020: -76.62; 2021: -16.51; 2022: -11.78; .
With a Piotroski F-Score of 2, Planet Green Holdings Corp's financial health appears concerning. This score, rooted in Joseph Piotroski's nine-point scale, evaluates a firm's profitability, liquidity, and operating efficiency. Given its rating, Planet Green Holdings Corp might be facing challenges in these areas.
Growth Prospects
A lack of significant growth is another area where Planet Green Holdings Corp seems to falter, as evidenced by the company's low Growth rank. Lastly, Planet Green Holdings Corp predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Planet Green Holdings Corp has enjoyed a strong reputation and recent growth, these metrics suggest that the company may face significant challenges in the future. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
