STU Stock Fair Value Calculation – Is Rama Steel Tubes Limited’s Stock Price Drop a Cause for Concern Despite Positive Financials?
April 8, 2023
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With the recent three-month decline in Rama Steel Tubes Limited’s stock price, down a considerable 23%, market watchers may be asking whether this is cause for concern. The company’s financials appear to be in good shape and so investors may be wondering whether it is reasonable to expect the market to correct the price. Steel & Tube ($NZSE:STU) is an engineering and infrastructure business that produces, distributes and services an extensive range of steel products, services and solutions. It is a New Zealand Stock Exchange listed company that provides its shareholders with a robust dividend policy and a well-valued stock. Although the company has experienced a slight decline in share price during the last three months, they have still managed to remain healthy as far as their financials are concerned, with good profitability and solid cash flows.
Overall, the current market situation suggests that despite the short-term decline in stock price, investors should not be too concerned about Rama Steel Tubes Limited’s financials. The company’s overall financial performance has been strong and their fundamentals remain sound. Furthermore, if the market does eventually correct the price in favor of Steel & Tube’s stock, investors could stand to reap significant rewards.
Share Price
The stock price of Rama Steel Tubes Limited (STEEL & TUBE) dropped by 1.8% on Thursday, opening at NZ$1.1 and closing at the same price. This decrease was in contrast to the company’s otherwise positive financials, leading to the question of whether this drop is cause for concern. Despite the slight decrease in share price, the company’s financial situation remains strong. Sales are up, profits are climbing, and Rama Steel Tubes has reported a positive cash flow for the past few quarters. Furthermore, the company’s debt-to-equity ratio has been steadily declining, indicating that it is becoming more financially stable over time.
It is unclear what caused the drop in stock price, as investors may have had a different reaction to the company’s financial results than expected. It is possible that the stock could recover in the near future, as there is no evidence that the company is experiencing any significant financial difficulties. While it is worth keeping an eye on the market and paying close attention to the company’s financial statements, investors should not be too alarmed by the current decline. If the price drop continues for an extended period of time, however, further investigation may be necessary. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for STU. More…
| Total Revenues | Net Income | Net Margin |
| 632.65 | 27.69 | 4.3% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for STU. More…
| Operations | Investing | Financing |
| 16.64 | -14.7 | 2.39 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for STU. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 391.26 | 182.01 | 1.26 |
Key Ratios Snapshot
Some of the financial key ratios for STU are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 10.2% | 130.9% | 7.2% |
| FCF Margin | ROE | ROA |
| 1.7% | 13.6% | 7.3% |
Analysis – STU Stock Fair Value Calculation
At GoodWhale, we have conducted a thorough analysis of the fundamentals of STEEL & TUBE. Our proprietary Valuation Line has determined that the stock’s fair value is around NZ$1.3. However, at present the stock is trading at NZ$1.1, which indicates that the stock is undervalued by 12.8%. This presents investors with an opportunity to purchase a quality stock at a bargain price. In our view, STEEL & TUBE is a great buy at its current price. More…
Peers
Steel & Tube Holdings Ltd is one of the leading steel companies in the world with a strong presence in Asia. The company produces a wide range of steel products including pipes, tubes, sheets, and more. Steel & Tube Holdings Ltd’s main competitors are Permsin Steel Works PCL, 2S Metal PCL, and PT Krakatau Steel (Persero) Tbk.
– Permsin Steel Works PCL ($SET:PERM)
Founded in 1954, Permsin Steel Works Public Company Limited is one of the leading steel manufacturers in Thailand. The company has a market cap of 981.32 million as of 2022 and a return on equity of 9.39%. The company produces a wide range of steel products including hot and cold rolled coils, galvanized coils, and pre-painted coils. It also manufactures steel pipes, sections, and wire rods. The company has a strong presence in the domestic market and exports its products to over 30 countries.
– 2S Metal PCL ($SET:2S)
Sohu.com Inc. ADR (SOHU) is a Chinese online media, video, search, and gaming company. The company operates its businesses through three segments: Online Media, Search, and Brand Advertising. The Online Media segment offers news, information, and entertainment content to users through its websites and mobile applications. The Search segment provides Chinese-language search engine for users to obtain information online, including web pages, news, images, and videos. The Brand Advertising segment offers online advertising services to customers in China. Sohu.com was founded in 1996 and is headquartered in Beijing, China.
As of 2022, Sohu.com Inc. ADR has a market capitalization of $1.8 billion and a return on equity of 7.74%. The company operates its business through three segments: Online Media, Search, and Brand Advertising. The Online Media segment offers news, information, and entertainment content to users through its websites and mobile applications. The Search segment provides Chinese-language search engine for users to obtain information online, including web pages, news, images, and videos. The Brand Advertising segment offers online advertising services to customers in China.
– PT Krakatau Steel (Persero) Tbk ($IDX:KRAS)
PT Krakatau Steel (Persero) Tbk is an Indonesian steel company that produces a wide range of steel products including hot and cold rolled coils, plates, sheets, and wire rods. The company has a market cap of 6.89T as of 2022 and a return on equity of 23.08%. PT Krakatau Steel is one of the largest steel producers in Indonesia and has a significant presence in the global steel market. The company’s products are used in a variety of industries including construction, automotive, and shipbuilding.
Summary
Investors should consider whether the decline in Rama Steel Tubes’ stock price is a sign of a broader market correction. Despite the stock’s recent decline, the company has sound financials and good fundamentals. It is important to research the sector and wider market conditions to better understand the fundamentals driving the stock’s movement. Investors should look at factors such as demand, supply, pricing and other macroeconomic trends.
In addition, they should consider company specific events such as management changes, new product launches, major contracts or announcements, and any relevant news or other events that could affect the company’s performance. Ultimately, investors should use a detailed analysis to make an informed decision about whether a company’s stock is worth investing in.
