MarketsMOJO Downgrades Pacific Industries to 'Sell' Rating Due to Weak Fundamentals

Pacific Industries, a microcap company in the mining and minerals industry, has recently received a 'Sell' rating from MarketsMOJO on August 6, 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 average Return on Equity (ROE) of 2.34%, which is considered low. Additionally, Pacific Industries has shown poor long-term growth with an annual rate of only 18.64% in operating profit over the last 5 years. This is further compounded by the company's weak ability to service its debt, as seen in its poor EBIT to Interest ratio of -0.08.

Another concerning factor is the company's negative operating profits, making the stock a risky investment compared to its historical valuations. While the stock has generated a high return of 97.71% in the past year, its profits have only risen by 82.2%, resulting in a low PEG ratio of 0.2.

However, there are some positive aspects to consider. Pacific Industries declared very positive results in March 2024, with a growth in net profit of 55.78%. The company has also shown positive results for the last two consecutive quarters, with its cash and cash equivalents at a high of Rs 46.50 crore and net sales at Rs 59.55 crore.

From a technical standpoint, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend. It is also worth noting that the majority shareholders of Pacific Industries are promoters, which could potentially provide some stability for the company.

Overall, while Pacific Industries has shown market-beating performance in the past year, the recent downgrade to 'Sell' by MarketsMOJO highlights some concerning factors for the company's long-term growth and financial strength. Investors should carefully consider these factors before making any investment decisions.