Lafarge Republic Inc. : Relatively good pick today?

Lafarge Republic Inc. relative valuation has changed to UNDERVALUED from NEUTRAL.

It has Fundamental Score of 75 and a CapitalCube Implied Price of 10.52 PHP

Relative Valuation

Lafarge Republic Inc.’s price of PHP 9.74 is lower than CapitalCube’s implied price of PHP 10.52. CapitalCube believes that at these levels, Lafarge Republic Inc. is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between PHP 8.65 and PHP 12.50.

Relative Valuation

Company Overview

  • Relative underperformance over the last year and the last month suggest a lagging position.
  • Lafarge Republic Inc.’s current Price/Book of 2.65 is about median in its peer group.
  • The market expects LRI-PH to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • LRI-PH has a successful operating model with relatively high net profit margins and asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • LRI-PH‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While LRI-PH‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a PE ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • LRI-PH has the financial and operating capacity to borrow quickly.

Investment Outlook

Lafarge Republic Inc. has a fundamental score of 75 and has a relative valuation of UNDERVALUED.

Lafarge Republic Inc. is on the top left quadrant of the CapitalCube Value – Price Matrix. We classify this space a ‘Value Play’. Here, Lafarge Republic Inc. is potentially undervalued, since it trades below its CapitalCube Implied Price of 10.52. At the same time, Lafarge Republic Inc. is also fundamentally strong with a score of 75. This is a classic value stock definition.

Fundamentals Vs Relative Valuation

Drivers of Valuation

The market expects LRI-PH to maintain the median rates of return it generates currently.

The market expects LRI-PH to grow at about the same rate as its chosen peers (PE of 15.65 compared to peer median of 18.75) and to maintain the peer median return (ROE of 17.15%) it currently generates.

The company’s current Price/Book of 2.65 is about median in its peer group.

Valuation Drivers

LRI-PH has moved towards a median ROE and PE from an Harvesting profile at the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Lafarge Republic, Inc. engages in the business of manufacturing and distribution of cement products. It manufactures, develops, exploits and markets cement, marble and all other kinds and classes of building materials. The company is also engaged in the processing or manufacture of materials for any industrial or commercial purposes. Lafarge Republic was founded on May 3, 1955 and is headquartered in Makati, Philippines.

Disclaimer

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