Centenial Surgical Suture Receives Downgrade, Risks Ahead

Centenial Surgical Suture, a microcap healthcare services company, has recently received a downgrade from 'Hold' to 'Sell' by MarketsMOJO on October 30th, 2023.
The downgrade is based on the company's weak long-term fundamental strength, with a -4.68% CAGR growth in operating profits over the last five years. Additionally, Centenial Surgical Suture's ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 1.92. This indicates that the company may struggle to meet its financial obligations.

In terms of profitability, the company has only been able to generate a modest Return on Equity (avg) of 4.11%, which signifies a low profitability per unit of shareholders' funds.

Furthermore, the company's recent results for September 2023 have been flat, with the lowest operating cash flow of Rs 1.30 Cr.

While the stock is technically in a mildly bullish range and its MACD and KST technical factors are also bullish, the stock's Return on Equity (ROE) of 3.1 indicates a fair valuation with a 1.3 price to book value. However, the stock is currently trading at a premium compared to its average historical valuations.

In the past year, Centenial Surgical Suture's stock has generated a return of 100.81%, but its profits have only risen by 4%, resulting in a high PEG ratio of 9.3. Majority shareholders of the company are non-institutional investors.

Despite its market-beating performance in the long-term as well as the near-term, Centenial Surgical Suture's recent downgrade suggests potential risks for investors. It is important to carefully consider these factors before making any investment decisions.