Coastal Corporation Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals and Underperformance

Coastal Corporation, a microcap company in the aquaculture industry, has recently received a 'Sell' rating from MarketsMOJO on September 2nd, 2024. This downgrade is based on several factors that indicate weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's poor performance in terms of operating profits. Over the last 5 years, Coastal Corporation has seen a negative CAGR growth of -30.49% in its operating profits. This indicates a lack of growth and profitability for the company.

Additionally, the company's high debt to EBITDA ratio of 5.68 times raises concerns about its ability to service its debt. This could potentially lead to financial difficulties for the company in the future.

In terms of recent financial results, Coastal Corporation's profits have fallen by -36.87% in the quarter ending June 2024, while its interest expenses have increased by 22.10%. The company's debt-equity ratio is also at its highest at 1.28 times, further highlighting its financial struggles.

Furthermore, Coastal Corporation has underperformed the market in the last year, with negative returns of -3.51% compared to the market's 38.49% returns. This indicates a lack of investor confidence in the company.

On a positive note, the stock is currently in a mildly bullish range and its technical factors, such as MACD and KST, are also bullish. However, with a ROCE of only 2.9, the stock is considered to be attractively valued with a 1.2 enterprise value to capital employed. It is also trading at a discount compared to its historical valuations.

It is worth noting that while the stock has generated negative returns in the past year, its profits have actually increased by 253.7%. This results in a low PEG ratio of 0.4, indicating that the stock may be undervalued.

Majority of the shareholders in Coastal Corporation are non-institutional investors, which could also contribute to the stock's underperformance in the market.

In conclusion, MarketsMOJO's 'Sell' rating on Coastal Corporation is based on its weak long-term fundamental strength and underperformance in the market. Investors should carefully consider these factors before making any investment decisions.