MarketsMOJO downgrades Seasons Textiles to 'Sell' due to weak fundamentals and high debt

Seasons Textiles, a microcap company in the textile industry, has recently received a 'Sell' rating from MarketsMOJO on June 18, 2024. This downgrade is based on weak long-term fundamental strength, with a -4.98% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 5.65 times, indicating a low ability to service debt. The return on equity (avg) of 0.19% also suggests low profitability per unit of shareholders' funds.
In the latest quarter, the company's operating profit to net sales (Q) was at its lowest at 13.70%. Other factors that contribute to the 'Sell' rating include the stock being in a mildly bullish range and its MACD and KST technical factors also being bullish. However, with a ROCE of 3.8, the stock has a very attractive valuation with a 0.6 enterprise value to capital employed. It is also currently trading at a discount compared to its average historical valuations.

Despite the stock generating a return of 29.16% over the past year, its profits have only risen by 27%. This could be a cause for concern for investors. It is worth noting that the majority shareholders of Seasons Textiles are the promoters of the company.

Overall, the downgrade to 'Sell' by MarketsMOJO highlights the company's weak financial performance and high debt levels. Investors should carefully consider these factors before making any investment decisions regarding Seasons Textiles.