Globe Specialty Metals, Inc. : Anticipation of a bearish reversal
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08/28/2012 | 08:47am
Opinion : Bearish under 15.2 USD
Target price : 13.4 USD
Stop loss: 15.9 USD
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NASDAQ
Steel |
Globe Specialty Metals, producer and seller of silicon metal and silicon-based alloys, should undergo some profit-taking after the rebound in recent sessions.
From a fundamental viewpoint, firstly, we note the high valuation of the company. PER for the current year is at 18.04x and expected at 15.69x for next year. With a valuation ratio of 1.45x, the group appears overvalued compared to its business activity. Regarding the financial situation, leverage is at 0.7x. Debts are estimated at 98.51 M USD for the current year.
Graphically, the stock went through a period of rebound in recent sessions towards the USD 15.18 medium-term resistance. The share should consolidate near this area. It could act as a stopping point of the upward movement. This scenario suggests a return to the USD 13.41 support area which will be a bearish objective. Moreover, there is a gap to fill.
The upside seems limited as shown by fundamentals and technical configuration. In contact with the USD 15.2 resistance, a movement of consolidation could return the stock towards the USD 13.4 mid-term support. As a result, the most aggressive investors could take a short position near USD 15.2 but they need to set a stop loss above this resistance because the crossing of this level would invalidate our scenario
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| Profitability |
2013e |
2014e |
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Operating Margin (EBIT / Sales)
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6,54% |
9,54% |
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operating laverage (Delta EBIT / Delta Sales)
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- |
19,0x |
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Net Margin (Net Profit / Revenue)
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-3,83% |
4,93% |
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ROA (Net Profit / Asset)
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2,70% |
4,40% |
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ROE (Net Profit / Equities)
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4,40% |
8,15% |
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Rate of Dividend
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-64,1% |
44,4% |
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