Both have high margins and return on investments.
It seems that its FCF is also high.
What about?
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Wednesday, November 9, 2011
Autometal and Metal Leve
I'm taking a look at Autometal (AUTM3) and Metal Leve (LEVE3).
Both have high margins and return on investments.
It seems that its FCF is also high.
What about?
Both have high margins and return on investments.
It seems that its FCF is also high.
What about?
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5 comments:
I would study about the MOAT.
I usually adjust for the exchange rate variations. As for the chanfe in working capital, i usually take a multi-year average. 7% yield is enough if you believe in 5% growth for 10 years and 3% growth after.
LEVE3 has generated 240 mi of cash in 2011 so far.
So we must expect cash generation of about 320 mi for the whole 2011.
Budget capital for the same year estimates about 100 mi in investments.
As a result, FCF will be 220 mi in 2011, a FCF Yield over 12%.
Of course, company is going through a good moment, but the high yield offers a nice safety margin!
What LEVE makes? Does it exports its products? What about the indebtness level?
The earnings are good now, but are not exceptional given the years before 2009.
The margins are increasing despite unfavorable exchange rate trend for the last years.
What bothers me is the low ROE and the competion from imports.
Maybe SHUL4 is a better bet. Higher growth, similar margins, similar current liquidity, higher ROE (20%). The problem is that the price may be too high now and the higher debt level.
Both SHUL and LEVE have similar EBIT Margin and ROIC. Earnings are higher for SHUL probably because of favorable exchange rates.
But LEVE is bigger and is in "Novo Mercado".
Also, LEVE bought at the ending of 2010 a company of the controller group that makes "anéis de pistões", so earnings now are not directly comparably with the previous ones.
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