Coastal Corporation Receives 'Sell' Rating from MarketsMOJO, Indicating Weak Long-Term Fundamentals

Coastal Corporation, a microcap company in the aquaculture industry, has recently received a 'Sell' rating from MarketsMOJO on July 15, 2024. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's operating losses. This indicates that the company is not generating enough revenue to cover its expenses, which is a concerning sign for investors. Additionally, Coastal Corporation has a high debt to EBITDA ratio of 5.68 times, which means that it may have difficulty in servicing its debt obligations.

Furthermore, the company's return on capital employed (ROCE) is only 9.12%, which is considered low and signifies a low profitability per unit of total capital. This is a cause for concern as it may affect the company's ability to generate returns for its investors.

From a technical standpoint, the stock is currently in a mildly bearish range and the trend has deteriorated from mildly bullish on July 12, 2024. The key technical factor, MACD, has also been bearish since July 12, indicating a potential downward trend for the stock.

In terms of performance, Coastal Corporation has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months. In the last 1 year, the stock has generated a negative return of -8.23%, while its profits have also decreased by -32.9%.

However, there are some positive factors to consider. The company reported positive results in March 2024, with a higher profit after tax of Rs 1.23 crore and the highest net sales of Rs 116.62 crore in the quarter. Additionally, with an ROCE of 2.9, the stock is currently trading at an attractive valuation with an enterprise value to capital employed ratio of 1.1. This indicates that the stock may be undervalued compared to its historical valuations.

It is worth noting that the majority of shareholders in Coastal Corporation are non-institutional investors. This may suggest that the company may not have the backing of large institutional investors, which could impact its stock performance.

In conclusion, while Coastal Corporation has some positive aspects, the overall outlook for the company is not favorable. With a 'Sell' rating from MarketsMOJO and several concerning factors, investors may want to approach this stock with caution.