TSX:NEO

Stock Analysis Report

Neo Performance Materials

Executive Summary

Neo Performance Materials Inc., through its subsidiaries, manufactures rare earth and rare metal-based functional materials in Canada and internationally.

Snowflake

Fundamentals

Very undervalued with excellent balance sheet.


Similar Companies

Share Price & News

How has Neo Performance Materials's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

6.8%

NEO

-2.2%

CA Chemicals

0.2%

CA Market


1 Year Return

-31.0%

NEO

-11.0%

CA Chemicals

3.5%

CA Market

Return vs Industry: NEO underperformed the Canadian Chemicals industry which returned -11% over the past year.

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


Shareholder returns

NEOIndustryMarket
7 Day6.8%-2.2%0.2%
30 Day15.4%-4.6%-3.3%
90 Day-1.3%-5.9%-1.9%
1 Year-28.8%-31.0%-7.9%-11.0%7.3%3.5%
3 Yearn/a-8.8%-14.2%14.7%4.4%
5 Yearn/a-22.3%-30.5%26.2%7.7%

Price Volatility Vs. Market

How volatile is Neo Performance Materials's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Neo Performance Materials undervalued compared to its fair value and its price relative to the market?

41.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: NEO (CA$11.91) is trading below our estimate of fair value (CA$20.35)

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


Price To Earnings Ratio

PE vs Industry: NEO is good value based on its PE Ratio (13.2x) compared to the Chemicals industry average (15x).

PE vs Market: NEO is good value based on its PE Ratio (13.2x) compared to the Canadian market (13.7x).


Price to Earnings Growth Ratio

PEG Ratio: NEO is good value based on its PEG Ratio (0.9x)


Price to Book Ratio

PB vs Industry: NEO is good value based on its PB Ratio (0.8x) compared to the CA Chemicals industry average (1.2x).


Next Steps

Future Growth

How is Neo Performance Materials forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

14.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NEO's forecast earnings growth (14.1% per year) is above the savings rate (1.9%).

Earnings vs Market: NEO's earnings (14.1% per year) are forecast to grow faster than the Canadian market (13% per year).

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

Revenue vs Market: NEO's revenue (4.4% per year) is forecast to grow slower than the Canadian market (5.5% per year).

High Growth Revenue: NEO's revenue (4.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if NEO's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Neo Performance Materials performed over the past 5 years?

-22.0%

Last years earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: Insufficient data to determine if NEO's year-on-year earnings growth rate was positive over the past 5 years.

Accelerating Growth: NEO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: NEO had negative earnings growth (-22%) over the past year, making it difficult to compare to the Chemicals industry average (-25.7%).


Return on Equity

High ROE: NEO's Return on Equity (6.3%) is considered low.


Return on Assets

ROA vs Industry: NEO has a higher Return on Assets than the Chemicals industry average last year.


Return on Capital Employed

ROCE Improving: Insufficient data to calculate NEO's Return on Capital Employed to determine if it has improved over the past 3 years.


Next Steps

Financial Health

How is Neo Performance Materials's financial position?


Financial Position Analysis

Short Term Liabilities: NEO's short term assets ($274.8M) exceeds its short term liabilities ($59.3M)

Long Term Liabilities: NEO's short term assets (274.8M) exceeds its long term liabilities (41.0M)


Debt to Equity History and Analysis

Debt Level: NEO's debt to equity ratio (0.2%) is considered satisfactory

Reducing Debt: Insufficient data to determine if NEO's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: NEO's debt is well covered by operating cash flow (2054%).

Interest Coverage: NEO's interest payments on its debt are well covered by EBIT (16.1x coverage).


Balance Sheet

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

Debt Coverage by Assets: NEO's debt is covered by short term assets (assets are 291.4x debt).


Next Steps

Dividend

What is Neo Performance Materials's current dividend yield, its reliability and sustainability?

3.25%

Current Dividend Yield


Dividend Yield vs Market

company3.2%marketbottom25%2.0%markettop25%5.9%industryaverage2.3%forecastin3Yearsn/a

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: NEO's dividend (3.25%) is higher than the bottom 25% of dividend payers in the Canadian market (1.98%).

High Dividend: NEO's dividend (3.25%) is low compared to the top 25% of dividend payers in the Canadian market (5.92%).

Stable Dividend: Whilst dividend payments have been stable, NEO has been paying a dividend for less than 10 years.

Growing Dividend: NEO's dividend payments have increased, but the company has only paid a dividend for 2 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (41.1%), NEO's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of Neo Performance Materials's salary, the management and board of directors tenure and is there insider trading?

3.2yrs

Average management tenure


CEO

Geoff Bedford (52yo)

2.1yrs

Tenure

US$1,654,360

Compensation

Mr. Geoffrey R. Bedford, also known as Geoff, has been Chief Executive Officer and President at Neo Performance Materials Inc. since September 2017. Previously, he served as President and Chief Executive O ...


CEO Compensation Analysis

Compensation vs. Market: Insufficient data to establish whether Geoff's total compensation is reasonable compared to companies of similar size in the Canadian market.

Compensation vs Earnings: Geoff's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.2yrs

Average Tenure

Experienced Management: NEO's management team is considered experienced (3.2 years average tenure).


Board Age and Tenure

2.0yrs

Average Tenure

52yo

Average Age

Experienced Board: NEO's board of directors are not considered experienced ( 2 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

BuyUS$56,00017 May 19
Rahim Suleman
EntityIndividual
Role
Member of the Board of Directors
Executive VP & CFO
Shares5,000
Max PriceUS$11.20
BuyUS$33,59001 Apr 19
Rahim Suleman
EntityIndividual
Role
Member of the Board of Directors
Executive VP & CFO
Shares2,800
Max PriceUS$12.00
BuyUS$127,90025 Mar 19
Geoffrey Bedford
EntityIndividual
Role
Chief Executive Officer
President
Shares10,000
Max PriceUS$12.79
BuyUS$127,05525 Mar 19
Rahim Suleman
EntityIndividual
Role
Member of the Board of Directors
Executive VP & CFO
Shares10,000
Max PriceUS$12.82

Ownership Breakdown


Management Team

  • Alex Caldwell

    Corporate Secretary

    • Tenure: 0yrs
  • Geoff Bedford (52yo)

    President

    • Tenure: 2.1yrs
    • Compensation: US$1.65m
  • Kevin Morris (50yo)

    Executive VP & COO

    • Tenure: 2.1yrs
    • Compensation: US$658.77k
  • Jeff Hogan

    Executive VP of Neo Chemicals & Oxides

    • Tenure: 3.2yrs
    • Compensation: US$519.44k
  • Frank Timmerman

    Senior Vice President of Neo Rare Metals

    • Tenure: 3.2yrs
  • Greg Kroll

    Executive Vice President of Magnquech

    • Tenure: 4.8yrs
    • Compensation: US$1.18m
  • Ali Mahdavi

    Capital Markets & IR Executive

    • Tenure: 0yrs

Board Members

  • G. Edwards (63yo)

    Independent Director

    • Tenure: 0.3yrs
  • Constantine Karayannopoulos (58yo)

    Independent Chairman

    • Tenure: 2yrs
    • Compensation: US$240.00k
  • Geoff Bedford (52yo)

    President

    • Tenure: 2.1yrs
    • Compensation: US$1.65m
  • Edgar Lee (43yo)

    Independent Director

    • Tenure: 2yrs
  • Emily Stephens (43yo)

    Independent Director

    • Tenure: 2yrs
  • Eric Noyrez (57yo)

    Lead Independent Director

    • Tenure: 2yrs
    • Compensation: US$147.00k
  • Claire M. Kennedy (52yo)

    Independent Director

    • Tenure: 2yrs
    • Compensation: US$145.00k
  • Brook Hinchman (36yo)

    Independent Director

    • Tenure: 2yrs
  • Nicholas Basso

    Independent Director

    • Tenure: 2yrs
  • Rahim Suleman

    Executive VP & CFO

    • Tenure: 2.1yrs
    • Compensation: US$604.39k

Company Information

Neo Performance Materials Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Neo Performance Materials Inc.
  • Ticker: NEO
  • Exchange: TSX
  • Founded: 1994
  • Industry: Specialty Chemicals
  • Sector: Materials
  • Market Cap: CA$458.918m
  • Shares outstanding: 38.53m
  • Website: https://www.neomaterials.com

Number of Employees


Location

  • Neo Performance Materials Inc.
  • 121 King Street West
  • Suite 1740
  • Toronto
  • Ontario
  • M5H 3T9
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
NEOTSX (The Toronto Stock Exchange)YesCommon SharesCACADDec 2017
N14DB (Deutsche Boerse AG)YesCommon SharesDEEURDec 2017
NOPM.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDDec 2017

Biography

Neo Performance Materials Inc., through its subsidiaries, manufactures rare earth and rare metal-based functional materials in Canada and internationally. The company operates through three segments: Magne ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/23 00:34
End of Day Share Price2019/10/22 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.