The higher macroeconomic and market volatility is playing out, while the tightening financial conditions and a return of credit risk have reinforced a risk-off stance. Given the bleak market outlook and dismal POWR Ratings of GoGold Resources Inc. (GLGDF), Aeva Technologies, Inc. (AEVA), and Alico, Inc. (ALCO), it could be wise to steer clear of these stocks now.
While some investors may be cheering softer-than-expected inflation data, revenues might begin to disappoint in the face of a credit crunch induced by the recent banking stress.
Also, while inflation has been on a downtrend for quite some time, it might not be enough to stall further rate hikes. The Fed is still expected to raise rates at its next FOMC meeting. JPMorgan Chase CEO Jamie Dimon warned high-interest rates to stay in place for a while, which could unveil problems in the economy.
Despite a strong start to the year, recent projections imply a potential recession in the upcoming months, with growth stalling later in 2023. Analysts at Goldman Sachs foresee a 35% chance of a U.S. recession in the next twelve months due to “increased near-term uncertainty around the economic effects of small bank stress.”
Moreover, the 1% decline in March’s retail sales, two times more than economists’ expectations, indicates that the economy is slowing down. Given the challenging macro environment, the stock market is expected to remain under immense pressure in the near term.
Against this backdrop, let’s take a look at the featured stocks:
GoGold Resources Inc. (GLGDF)
GLGDF is a Canada-based silver and gold producer engaged in operating, developing, exploring, and acquiring high-quality projects in Mexico. The company operates the Parral Tailings mine in the state of Chihuahua and the Los Ricos South and Los Ricos North exploration projects in the state of Jalisco.
In terms of forward EV/Sales, GLGDF is trading at 11.03x, 640.9% higher than the industry average of 1.49x. Also, its forward EV/EBITDA and EV/EBIT multiples of 124.75 and 560.05 are significantly higher compared to the industry averages of 7.57x and 11.03x, respectively.
For the first quarter that ended December 31, 2022, GLGDF’s revenue decreased 4.2% year-over-year to $8.48 million. Its operating loss amounted to $2.24 million compared to an operating income of $574 million in the prior-year quarter. The company’s net loss and net loss per share widened 484% and 400% year-over-year to $2.89 million and $0.01, respectively.
Analysts expect the company’s revenue to decline 3.2% year-over-year in the fiscal second quarter (ended March 31, 2023) to $9.96 million. Moreover, it failed to surpass the revenue estimates in each of the trailing four quarters.
Shares of GLGDF have slumped 39.5% over the past year and 6% year-to-date to close the last trading session at $1.51.
GLGDF’s weak fundamentals are reflected in its POWR Ratings. It has an overall rating of D, equating to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a D grade for Value, Momentum, and Quality. Within the D-rated Miners - Diversified industry, it is ranked #32 of 42 stocks. Click here to see the other ratings of GLGDF for Growth, Stability, and Sentiment.
Aeva Technologies, Inc. (AEVA)
AEVA is engaged in designing, manufacturing, and sale of LiDAR sensing systems and related perception and autonomy-enabling software in the United States, Thailand, Europe, the Middle East, and Asia. It develops its products using frequency-modulated continuous-wave sensing technology.
In the fiscal fourth quarter that ended December 31, 2022, AEVA’s revenue decreased 93.5% year-over-year to $188 thousand. Its gross loss stood at $3.13 million versus a gross profit of $943 thousand in the prior-year quarter, while its non-GAAP operating loss widened 49.6% from the year-ago value to $38.51 million.
AEVA’s adjusted net loss came in at $36.83 million and $0.17 per share, widening 43.9% and 41.7% from the same quarter last year.
Furthermore, the stock’s forward Price/Sales multiple of 40.84 is significantly higher than the 2.70 industry average.
Street expects AEVA’s revenues to decline 27.1% year-over-year to $828.57 thousand in the first quarter that ended March 31, 2023. Its EPS is expected to decrease by 11% year-over-year in the to-be-reported quarter to a loss per share of $0.14 and remain negative in the fiscal year 2023. Moreover, it missed the EPS estimates in three of the trailing four quarters.
Over the past year, the stock has declined 71.6% to close the last trading session at $1.08.
AEVA’s POWR Ratings reflect this weak outlook. It has an overall rating of F, equating to a Strong Sell in our proprietary rating system. It has an F grade for Momentum, Stability, and Quality and a D for Growth and Value. Out of 60 stocks in the Auto Parts industry, it is ranked #59.
Beyond what I’ve stated above, we have also given AEVA grades for Sentiment. Get all AEVA ratings here.
Alico, Inc. (ALCO)
ALCO operates as an agribusiness and land management company through two segments: Alico Citrus; and Land Management and Other Operations in the United States.
In terms of forward EV/Sales, ALCO is trading at 5.81x, 239.3% higher than the industry average of 1.71x. Likewise, its forward EV/EBITDA and Price/Sales multiples of 31.52 and 3.45 are 156.6% and 207.1% higher than the 12.29 and 1.12 industry averages, respectively.
During the first quarter that ended December 31, 2022, ALCO’s total operating revenues decreased 31% year-over-year to $10.59 million. The company’s gross loss stood at $3.80 million versus a gross profit of $1.81 million in the prior-year quarter, while its loss from operations widened 716.3% year-over-year to $6.31 million. ALCO’s net loss came in at $3.15 million, compared to a net income of $10.13 million in the year-ago period.
Also, its adjusted EBITDA loss came in at $3.44 million, compared to an adjusted EBITDA of $2.37 million in the same quarter last year. The company’s adjusted net loss per share amounted to $0.84, widening 250% year-over-year.
The consensus EPS estimate of $0.13 for the fiscal second quarter (ended March 31, 2023) represents a 95.3% decline year-over-year. The consensus revenue estimate of $28 million for the past quarter represents a 43.6% decrease from the same period last year. The company has a grim earnings surprise history, as it missed the consensus EPS estimates in each of the trailing four quarters.
The stock has declined 4.2% year-to-date to close the last trading session at $24.86.
ALCO’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
It has an F grade for Growth, Value, and Momentum and a D for Stability and Quality. Among 25 stocks in the D-rated Agriculture industry, it is ranked last. Click here to see ALCO’s rating for Sentiment.
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GLGDF shares were trading at $1.52 per share on Tuesday morning, up $0.01 (+0.46%). Year-to-date, GLGDF has declined -5.59%, versus a 8.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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