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 February 14, 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 -30.49% CAGR growth in operating profits, which is a significant decline. Additionally, the company has a high debt to EBITDA ratio of 5.68 times, indicating a low ability to service debt.

In terms of financial results, Coastal Corporation's December 2023 results were flat, with a -32.92% growth in PAT (9M) and a ROCE (HY) of only 2.62%. The company also has a high debt-equity ratio of 1.01 times, which is the highest among its peers.

Furthermore, Coastal Corporation has underperformed the market in the last year, with a return of only 21.12% compared to the market's (BSE 500) return of 32.28%. This indicates that the company's stock has not been able to keep up with the overall market performance.

On a technical level, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend. However, with a ROCE of only 1.8, the stock is considered to have an attractive valuation with a 1.2 enterprise value to capital employed. This means that the stock is currently trading at a discount compared to its historical valuations.

It is also worth noting that while the stock has generated a return of 21.12% in the last year, its profits have fallen by -85%. This could be a cause for concern for potential investors.

In terms of ownership, Coastal Corporation has a majority of non-institutional shareholders. This means that the company's stock is not heavily influenced by institutional investors, which could potentially impact its performance.

Overall, the downgrade to 'Sell' by MarketsMOJO is based on the company's weak long-term fundamental strength and underperformance in the market. Investors should carefully consider these factors before making any investment decisions regarding Coastal Corporation.