OTCPK:LGSX.Y

Stock Analysis Report

Executive Summary

Light S.A., through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric power in Brazil.

Rewards

Trading at 18.8% below its fair value

Earnings grew by 985% over the past year

Risk Analysis

Earnings are forecast to decline by an average of -45% per year for the next 3 years

Debt is not well covered by operating cash flow

Shares are highly illiquid

Shareholders have been diluted in the past year



Snowflake Analysis

Solid track record and good value.

Share Price & News

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


Latest Share Price and Events

Stable Share Price: LGSX.Y's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0%

LGSX.Y

1.7%

US Electric Utilities

0.9%

US Market


1 Year Return

13.1%

LGSX.Y

28.4%

US Electric Utilities

20.0%

US Market

Return vs Industry: LGSX.Y underperformed the US Electric Utilities industry which returned 28.6% over the past year.

Return vs Market: LGSX.Y underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

LGSX.YIndustryMarket
7 Day0%1.7%0.9%
30 Day-2.6%6.0%1.4%
90 Dayn/a14.5%8.8%
1 Year14.0%13.1%32.6%28.4%22.5%20.0%
3 Year-12.6%-13.8%57.3%42.2%49.9%40.3%
5 Year17.9%12.0%85.2%54.1%73.2%54.1%

Price Volatility Vs. Market

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


Simply Wall St News

No news available

Valuation

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

18.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LGSX.Y ($5.6) is trading below our estimate of fair value ($6.89)

Significantly Below Fair Value: LGSX.Y is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: LGSX.Y is good value based on its PE Ratio (2.8x) compared to the Electric Utilities industry average (26.6x).

PE vs Market: LGSX.Y is good value based on its PE Ratio (2.8x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: LGSX.Y's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: LGSX.Y is good value based on its PB Ratio (1x) compared to the US Electric Utilities industry average (2.4x).


Next Steps

Future Growth

How is Light forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

-45.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LGSX.Y's earnings are forecast to decline over the next 3 years (-45% per year).

Earnings vs Market: LGSX.Y's earnings are forecast to decline over the next 3 years (-45% per year).

High Growth Earnings: LGSX.Y's earnings are forecast to decline over the next 3 years.

Revenue vs Market: LGSX.Y's revenue (2.6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: LGSX.Y's revenue (2.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LGSX.Y's Return on Equity is forecast to be low in 3 years time (10.5%).


Next Steps

Past Performance

How has Light performed over the past 5 years?

8.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LGSX.Y has high quality earnings.

Growing Profit Margin: LGSX.Y's current net profit margins (13.8%) are higher than last year (1.3%).


Past Earnings Growth Analysis

Earnings Trend: LGSX.Y's earnings have grown by 8.9% per year over the past 5 years.

Accelerating Growth: LGSX.Y's earnings growth over the past year (985%) exceeds its 5-year average (8.9% per year).

Earnings vs Industry: LGSX.Y earnings growth over the past year (985%) exceeded the Electric Utilities industry 7.3%.


Return on Equity

High ROE: Whilst LGSX.Y's Return on Equity (25.85%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Light's financial position?


Financial Position Analysis

Short Term Liabilities: LGSX.Y's short term assets (R$5.6B) exceed its short term liabilities (R$5.0B).

Long Term Liabilities: LGSX.Y's short term assets (R$5.6B) do not cover its long term liabilities (R$12.8B).


Debt to Equity History and Analysis

Debt Level: LGSX.Y's debt to equity ratio (134.3%) is considered high.

Reducing Debt: LGSX.Y's debt to equity ratio has reduced from 210.1% to 134.3% over the past 5 years.

Debt Coverage: LGSX.Y's debt is not well covered by operating cash flow (4%).

Interest Coverage: LGSX.Y's interest payments on its debt are well covered by EBIT (4x coverage).


Balance Sheet

Inventory Level: LGSX.Y has a low level of unsold assets or inventory.

Debt Coverage by Assets: LGSX.Y's debt is not covered by short term assets (assets are 0.6x debt).


Next Steps

Dividend

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

0.89%

Current Dividend Yield


Dividend Yield vs Market

company0.9%marketbottom25%1.4%markettop25%3.7%industryaverage2.9%forecastin3Years3.0%

Current dividend yield vs market & industry

Notable Dividend: LGSX.Y's dividend (0.89%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: LGSX.Y's dividend (0.89%) is low compared to the top 25% of dividend payers in the US market (3.69%).


Stability and Growth of Payments

Stable Dividend: LGSX.Y's dividend payments have been volatile in the past 10 years.

Growing Dividend: LGSX.Y's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (2.5%), LGSX.Y's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LGSX.Y's dividends in 3 years are forecast to be well covered by earnings (33.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

0.8yrs

Average management tenure


CEO

Ana Marta Veloso (50yo)

0.8yrs

Tenure

0

Ms. Ana Marta Horta serves as Chief Executive Officer, Chief Business Development and Investor Relations Office at Light S.A. since April 30, 2019 and served as Interim Chief Communications Officer since 2 ...


Leadership Team

NamePositionTenureCompensationOwnership
Ana Marta Veloso
CEO, Chief Business Development & IR Officer0.8yrsno datano data
Roberto Barroso
Chief Financial and Business Development Officer & Member of Board of Executive Officer0yrsno datano data
Cláudio Bernardo de Moraes
Chief Corporate Management Officer & Member of Board of Executive Officers0.8yrsno datano data
Dalmer de Souza
Chief Commercial Officer & Member of Board of Executive Officer0yrsno datano data
Alessandra Genu Amaral
Chief Energy and Trading Officer & Member of Board of Executive Officers0.8yrsno datano data
Marcus Pimenta
Member of Board of Executive Officers & Chief Engineering Officer0.7yrsno datano data
Claudio Bernardo Guimarães Moraes
Chief Corporate Management Officer & Member of Board of Executive Officers0yrsno datano data
Simone da Silva Cerutti de Azevedo
Accounting Manager0yrsno datano data
Eduardo Reis
Controllership Superintendent0yrsno datano data
Rodrigo Vilela
IR Superintendent0yrsno datano data

0.8yrs

Average Tenure

Experienced Management: LGSX.Y's management team is not considered experienced ( 0.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
David Zylbersztajn
Independent Chairman0.8yrsno datano data
Carlos Ferreira
Independent Deputy Chairman0.2yrsno datano data
Ricardo Reisen de Pinho
Independent Director0.8yrsno datano data
Carlos da Cruz
Employees Representative Director0.8yrsno datano data
Carlos Da Parcias
Independent Director0.2yrsno datano data
Patrícia Gracindo de Assis Bentes
Independent Director0.2yrsno datano data
Antonio dos Santos e Junqueira
Director0.8yrsno datano data
Domenica Noronha
Member of Fiscal Council0.8yrsno datano data
Octávio Lopes
Independent Director0.2yrsno datano data

0.8yrs

Average Tenure

59yo

Average Age

Experienced Board: LGSX.Y's board of directors are not considered experienced ( 0.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 15.3%.


Top Shareholders

Company Information

Light S.A.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Light S.A.
  • Ticker: LGSX.Y
  • Exchange: OTCPK
  • Founded: 1899
  • Industry: Electric Utilities
  • Sector: Utilities
  • Market Cap: R$6.583b
  • Listing Market Cap: R$1.524b
  • Shares outstanding: 303.93m
  • Website: https://www.light.com.br

Number of Employees


Location

  • Light S.A.
  • Rua Marechal Floriano, n 168
  • bloco 1 – 2 andar
  • Rio de Janeiro
  • Rio de Janeiro
  • 20080-002
  • Brazil

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LIGT3BOVESPA (Bolsa de Valores de Sao Paulo)YesOrdinary SharesBRBRLFeb 2006
LGSX.YOTCPK (Pink Sheets LLC)SPONS ADR EACH REPR 1 ORDUSUSDNov 2008
5LIABST (Boerse-Stuttgart)SPONS ADR EACH REPR 1 ORDDEEURNov 2008

Biography

Light S.A., through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric power in Brazil. It generates power through hydro, solar, and wind power plants. As of December 31, 2018, the company had generation projects with a total installed capacity of 1,119 MW. It operates in 31 cities of the state of Rio de Janeiro covering a population of approximately 11 million customers. The company also engages in the purchase, sale, import, and export of electric and thermal power, gas, and industrial utilities; and provision of energy related advisory services, as well as the acquisition and sale of goods related to the study, design, implementation, operation, and maintenance of construction works and facilities. In addition, it provides services to low voltage clients, including the assembly, remodeling, and maintenance of facilities. It serves residential, industrial, commercial, rural, and public sector customers. The company was founded in 1899 and is headquartered in Rio de Janeiro, Brazil. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/18 00:29
End of Day Share Price2020/01/29 00:00
Earnings2019/09/30
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.