Eco Recycling Downgraded to 'Hold' by MarketsMOJO Due to Financial Concerns

Eco Recycling, a smallcap company in the trading industry, has recently been downgraded to a 'Hold' by MarketsMOJO on September 24, 2024. This decision was based on the company's recent financial performance and technical indicators.
While Eco Recycling reported outstanding results in June 2024 with a growth in net profit of 393.94%, the company's ability to service debt is a concern as it has a high debt to EBITDA ratio of 4.83 times. Additionally, the company's return on capital employed is low at 3.61%, indicating low profitability per unit of total capital.

On the positive side, Eco Recycling has consistently declared positive results for the last 5 consecutive quarters and has shown a growth in net sales and PBDIT. The stock is also technically in a mildly bullish range, with its MACD and KST technical factors being bullish.

However, the company's long-term growth has been poor, with net sales growing at an annual rate of 19.04% over the last 5 years. This, coupled with a high price to book value of 27.8 and a PEG ratio of 0.5, suggests that the stock is currently overvalued.

It is also worth noting that despite its smallcap size, domestic mutual funds hold only 0% of the company, which could indicate a lack of confidence in the company's business or its current valuation.

In conclusion, while Eco Recycling has shown strong financial performance in the past year, its high debt and expensive valuation make it a 'Hold' for now. Investors should keep an eye on the company's future performance and any changes in its debt management before making any investment decisions.