Graftech International Stock Fair Value Calculation – GRAFTECH INTERNATIONAL Reports Fourth Quarter FY2022 Earnings Results on February 3, 2023.
March 12, 2023
Earnings Overview
GRAFTECH INTERNATIONAL ($NYSE:EAF) announced their financial results for the fourth quarter of FY2022 on February 3 2023. Total revenue had decreased by 64.4% to USD 50.3 million when compared to the same quarter in the previous year, while net income had declined by 31.9% to USD 247.5 million.
Transcripts Simplified
In the fourth quarter of 2022, Graftech International reported net income of $50 million and an earnings per share of $0.20. Adjusted EBITDA was $80 million, a decrease from $183 million in the fourth quarter of 2021 reflecting the lower sales volume and higher year-over-year costs. Cash costs per metric ton for the quarter were nearly $5,200, with a projected year-over-year increase of 17-20% for 2023.
Cash from operations for the quarter totaled $50 million, and adjusted free cash flow was $23 million. The company’s gross debt-to-adjusted EBITDA ratio was 1.7 times at the end of 2022, while the net debt ratio was 1.5 times.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Graftech International. More…
| Total Revenues | Net Income | Net Margin |
| 1.28k | 382.96 | 29.9% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Graftech International. More…
| Operations | Investing | Financing |
| 324.63 | -71.97 | -176.27 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Graftech International. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.6k | 1.27k | 1.32 |
Key Ratios Snapshot
Some of the financial key ratios for Graftech International are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| -10.6% | -21.3% | 38.2% |
| FCF Margin | ROE | ROA |
| 19.7% | 100.4% | 19.0% |
Stock Price
The stock opened on Friday at $5.9 and closed at $5.6, plummeting by 15.3% from its closing price of 6.6 the prior day. This was a marked drop from the beginning of the trading day and a sign of investor sentiment on the company’s financial performance for the quarter. The financial results released by GRAFTECH INTERNATIONAL revealed an overall decrease in revenue for the period. Operating expenses also increased, leading to increased pressure on already tight margins. Despite these challenges, the company was able to report an increase in net income as compared to the prior year, but this was not enough to persuade investors.
The market reacted negatively to the news, driving down GRAFTECH INTERNATIONAL shares. This is a stark contrast to the positive sentiment the company enjoyed prior to the earnings release. In order to regain investor confidence, GRAFTECH INTERNATIONAL must demonstrate that they are able to deliver steady financial results in the coming quarters. Only then will they be able to re-establish themselves with investors and analysts. Live Quote…
Analysis – Graftech International Stock Fair Value Calculation
At GoodWhale, we conducted a thorough review of GRAFTECH INTERNATIONAL‘s fundamentals. After careful research and analysis, our proprietary Valuation Line indicated that the intrinsic value of GRAFTECH INTERNATIONAL share is around $40.1. Currently, the stock is traded at $5.6, resulting in an 86.1% undervaluation. This suggests that GRAFTECH INTERNATIONAL share is a good purchase at its current price. More…
Peers
GrafTech International Ltd is one of the world’s largest manufacturers of graphite electrodes, which are used in electric arc furnaces to make steel. The company has a market share of about 17 percent. Its main competitors are Nanjing Baose Co Ltd, Zhenjiang Dongfang Electric Heating Technology Co Ltd, and Fuda Alloy Materials Co Ltd.
– Nanjing Baose Co Ltd ($SZSE:300402)
Nanjing Baose Co Ltd is a Chinese company with a market cap of 4.12B as of 2022. The company has a Return on Equity of 7.34%. Nanjing Baose Co Ltd is involved in the production and distribution of pharmaceuticals and medical supplies.
– Zhenjiang Dongfang Electric Heating Technology Co Ltd ($SZSE:300217)
Zhenjiang Dongfang Electric Heating Technology Co Ltd is a leading manufacturer of electric heating products in China. The company has a market cap of 10.34B as of 2022 and a return on equity of 7.75%. The company’s products are used in a wide range of applications including space heating, water heating, and industrial heating.
– Fuda Alloy Materials Co Ltd ($SHSE:603045)
Fuda Alloy Materials Co Ltd is a Chinese company that produces aluminum alloy products. Its market cap as of 2022 was $2.25 billion, and its return on equity was 6.16%. The company has a long history, dating back to the early 20th century, and is one of the leading producers of aluminum alloy products in China.
Summary
GRAFTECH INTERNATIONAL‘s fourth quarter FY2022 earnings results showed a significant year-on-year decline in both total revenue and net income. Total revenue decreased by 64.4% to USD 50.3 million, while net income decreased 31.9% year-over-year to USD 247.5 million. The stock price dropped the same day, indicating investor pessimism about the company’s performance. Investors should consider any potential catalysts for growth in order to make informed decisions about investing in GRAFTECH INTERNATIONAL.
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