TSX:LGO

Stock Analysis Report

Executive Summary

Largo Resources Ltd., a natural resource company, engages in the acquisition, exploration, development, and operation of mining and exploration properties located in Brazil and Canada.

Snowflake

Fundamentals

Flawless balance sheet and undervalued.

Share Price & News

How has Largo Resources's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-1.4%

LGO

0.5%

CA Metals and Mining

0.2%

CA Market


1 Year Return

-67.1%

LGO

15.0%

CA Metals and Mining

3.5%

CA Market

Return vs Industry: LGO underperformed the Canadian Metals and Mining industry which returned 15% over the past year.

Return vs Market: LGO underperformed the Canadian Market which returned 3.5% over the past year.


Shareholder returns

LGOIndustryMarket
7 Day-1.4%0.5%0.2%
30 Day-12.6%-8.9%-3.3%
90 Day-16.3%-8.0%-1.9%
1 Year-67.1%-67.1%15.9%15.0%7.3%3.5%
3 Year223.3%223.3%-11.6%-13.2%14.7%4.4%
5 Year-36.8%-36.8%15.4%11.6%26.2%7.7%

Price Volatility Vs. Market

How volatile is Largo Resources's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Largo Resources undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LGO (CA$1.39) is trading below our estimate of fair value (CA$4.23)

Significantly Below Fair Value: LGO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: LGO is good value based on its PE Ratio (4.7x) compared to the Metals and Mining industry average (13.4x).

PE vs Market: LGO is good value based on its PE Ratio (4.7x) compared to the Canadian market (13.7x).


Price to Earnings Growth Ratio

PEG Ratio: LGO is good value based on its PEG Ratio (0.2x)


Price to Book Ratio

PB vs Industry: LGO is overvalued based on its PB Ratio (2x) compared to the CA Metals and Mining industry average (1.3x).


Next Steps

Future Growth

How is Largo Resources forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

19.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LGO's forecast earnings growth (19.9% per year) is above the savings rate (1.9%).

Earnings vs Market: LGO's earnings (19.9% per year) are forecast to grow faster than the Canadian market (13% per year).

High Growth Earnings: LGO's earnings are forecast to grow, but not significantly.

Revenue vs Market: LGO's revenue (9.6% per year) is forecast to grow faster than the Canadian market (5.5% per year).

High Growth Revenue: LGO's revenue (9.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LGO's Return on Equity is forecast to be low in 3 years time (19.1%).


Next Steps

Past Performance

How has Largo Resources performed over the past 5 years?

63.1%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: LGO has become profitable over the past 5 years, growing earnings by 63.1% per year.

Accelerating Growth: LGO's earnings growth over the past year (4.6%) is below its 5-year average (63.1% per year).

Earnings vs Industry: LGO earnings growth over the past year (4.6%) exceeded the Metals and Mining industry -11.9%.


Return on Equity

High ROE: LGO's Return on Equity (43.2%) is considered outstanding.


Return on Assets

ROA vs Industry: LGO has a higher Return on Assets than the Metals and Mining industry average last year.


Return on Capital Employed

ROCE Improving: LGO's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Largo Resources's financial position?


Financial Position Analysis

Short Term Liabilities: LGO's short term assets (CA$220.7M) exceeds its short term liabilities (CA$120.6M)

Long Term Liabilities: LGO's short term assets (220.7M) exceeds its long term liabilities (9.6M)


Debt to Equity History and Analysis

Debt Level: LGO's debt to equity ratio (8.1%) is considered satisfactory

Reducing Debt: LGO's debt to equity ratio has reduced from 104.7% to 8.1% over the past 5 years.

Debt Coverage: LGO's debt is well covered by operating cash flow (1280%).

Interest Coverage: LGO's interest payments on its debt are well covered by EBIT (10.1x coverage).


Balance Sheet

Inventory Level: LGO has a high level of physical assets or inventory.

Debt Coverage by Assets: LGO's debt is covered by short term assets (assets are 7.5x debt).


Next Steps

Dividend

What is Largo Resources's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%2.0%markettop25%5.9%industryaverage1.3%forecastin3Years0%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: Unable to evaluate LGO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate LGO's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.

Stable Dividend: Insufficient data to determine if LGO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if LGO's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of LGO's dividend in 3 years as they are not forecast to pay a notable one for the Canadian market.


Next Steps

Management

What is the CEO of Largo Resources's salary, the management and board of directors tenure and is there insider trading?

4.8yrs

Average management tenure


CEO

Paulo Misk 0

0.08yrs

Tenure

CA$1,055,177

Compensation

Mr. Paulo Guimarães Misk serves as Chief Executive Officer and Director of Largo Resources Ltd. since September 8, 2019. Mr. Misk is the President of Largo Resources Ltd. since October 2018 and served as i ...


CEO Compensation Analysis

Compensation vs. Market: Paulo has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the Canadian market.

Compensation vs Earnings: Paulo's compensation has increased by more than 20% in the past year.


Management Age and Tenure

4.8yrs

Average Tenure

Experienced Management: LGO's management team is considered experienced (4.8 years average tenure).


Board Age and Tenure

2.4yrs

Average Tenure

52yo

Average Age

Experienced Board: LGO's board of directors are not considered experienced ( 2.4 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellCA$1,106,39017 Jan 19
Alberto Beeck
EntityIndividual
Shares356,900
Max PriceCA$3.10
SellCA$1,896,23118 Dec 18
Alberto Beeck
EntityIndividual
Shares608,000
Max PriceCA$3.16
SellCA$90,41114 Dec 18
Ernest Cleave
EntityIndividual
Role
Chief Financial Officer
Chief Financial Officer
Shares28,620
Max PriceCA$3.16
SellCA$294,55114 Dec 18
Mark Smith
EntityIndividual
Shares93,242
Max PriceCA$3.16
BuyCA$28,56527 Nov 18
Mark Smith
EntityIndividual
Shares10,000
Max PriceCA$2.86

Ownership Breakdown


Management Team

  • Kurt Menchen (68yo)

    • Tenure: 12.6yrs
    • Compensation: CA$792.19k
  • Ernest Cleave (50yo)

    Chief Financial Officer

    • Tenure: 6.1yrs
    • Compensation: CA$936.54k
  • Nilson Chaves

    Vice President of Finance & Administration at Vanàdio

    • Tenure: 3.5yrs
    • Compensation: CA$733.24k
  • Paulo Misk

    President

    • Tenure: 0.08yrs
    • Compensation: CA$1.06m
  • Alex Guthrie

    Manager of Investor Relations & Communications

    • Tenure: 0yrs
  • David Harris

    Corporate Controller

    • Tenure: 0yrs
    • Compensation: CA$461.95k
  • Francesco D'Alessio

    Head of Sales - Americas

    • Tenure: 0yrs

Board Members

  • David Brace (66yo)

    Independent Director

    • Tenure: 7.3yrs
    • Compensation: CA$132.29k
  • Jesus Alberto Arias (52yo)

    Non-Executive Chairman

    • Tenure: 0.08yrs
    • Compensation: CA$154.79k
  • Daniel Tellechea (72yo)

    Independent Director

    • Tenure: 4.3yrs
    • Compensation: CA$147.29k
  • Koko Yamamoto (47yo)

    Independent Director

    • Tenure: 4.3yrs
    • Compensation: CA$139.79k
  • Paulo Misk

    President

    • Tenure: 0.08yrs
    • Compensation: CA$1.06m
  • Jonathan Lee (38yo)

    Independent Director

    • Tenure: 0.5yrs

Company Information

Largo Resources Ltd.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Largo Resources Ltd.
  • Ticker: LGO
  • Exchange: TSX
  • Founded: 1988
  • Industry: Diversified Metals and Mining
  • Sector: Materials
  • Market Cap: CA$739.353m
  • Shares outstanding: 531.91m
  • Website: https://www.largoresources.com

Number of Employees


Location

  • Largo Resources Ltd.
  • 55 University Avenue
  • Suite 1105
  • Toronto
  • Ontario
  • M5J 2H7
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LR81DB (Deutsche Boerse AG)NPV (POST REVERSE SPLIT)DEEURNo data
LGOTSX (The Toronto Stock Exchange)YesCommon SharesCACADMar 1990
LR81DB (Deutsche Boerse AG)YesCommon SharesDEEURMar 1990
LGOR.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDMar 1990

Biography

Largo Resources Ltd., a natural resource company, engages in the acquisition, exploration, development, and operation of mining and exploration properties located in Brazil and Canada. It primarily explore ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/23 23:33
End of Day Share Price2019/10/23 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.