Solitaire Machine Tools Receives 'Hold' Rating After Positive Results and Bullish Trend

Solitaire Machine Tools, a microcap engineering company, has recently received a 'Hold' rating from MarketsMOJO on January 30, 2024. This upgrade comes after the company's positive results in September 2023, with its operating cash flow reaching a high of Rs 2.40 crore and dividends per share at Rs 1.50. Additionally, the company's net sales for the first 9 months of the fiscal year were higher at Rs 16.78 crore.
Technically, the stock is currently in a bullish range and has shown improvement from a mildly bullish trend on January 30, 2024. Multiple factors, such as MACD, Bollinger Band, KST, and DOW, indicate a bullish outlook for the stock.

The majority of the company's shareholders are non-institutional investors, and Solitaire Machine Tools has shown market-beating performance in both the long term and near term. In the past year, the stock has generated a return of 83.54%, outperforming the BSE 500 index. This trend has also been seen in the last 3 years and 3 months.

However, the company's long-term fundamental strength is weak, with a -1.87% CAGR growth in operating profits over the last 5 years. Its ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 1.62. The company's return on equity (avg) is at 7.81%, indicating low profitability per unit of shareholders' funds.

With a ROE of 10, the stock is currently trading at an expensive valuation with a price to book value of 2.3. It is also trading at a premium compared to its average historical valuations. While the stock has generated a high return of 83.54% in the past year, its profits have only risen by 40.2%, resulting in a PEG ratio of 0.5.

Overall, Solitaire Machine Tools shows potential for growth in the near term, but its weak long-term fundamentals and expensive valuation should be considered by investors before making any decisions.