What Loma Negra’s recent performance means for investors
Loma Negra Compañía Industrial Argentina Sociedad Anónima (NYSE:LOMA) has seen mixed share performance lately, with a 1 day gain of 1.8% and a roughly 8.9% move over the past week, set against weaker month and past 3 months returns.
See our latest analysis for Loma Negra Compañía Industrial Argentina Sociedad Anónima.
Zooming out, the recent 1 day and 7 day share price gains come after weaker 30 day and year to date share price returns. At the same time, the 3 year and 5 year total shareholder returns above 60% and 140% respectively point to a stronger longer term record than the recent pullback suggests.
If you are weighing Loma Negra alongside other opportunities, this can be a good moment to see how it stacks up against 8 top copper producer stocks
With Loma Negra trading at US$10.97 against an analyst price target of US$15.00 and recent results showing annual revenue and net income growth, is there a buying opportunity here, or is the market already pricing in future growth?
Price-to-Earnings of 75.9x: Is it justified?
On a P/E of 75.9x, Loma Negra is priced well above many peers, even though the last close sits at $10.97 against an analyst target of $15.00.
The P/E ratio compares the current share price to earnings per share, so a higher P/E usually reflects the market paying more for each unit of current earnings.
For Loma Negra, that high P/E sits alongside annual earnings growth of 30.9% and forecasts that point to significantly higher profits over the next three years. However, earnings fell 84.7% over the past year, net profit margins moved from 22% to 2.8%, and return on equity is currently 2.1%. Taken together, these figures suggest the price is leaning heavily on expectations rather than recent profitability.
Relative to the Global Basic Materials industry average P/E of 14.3x and a fair P/E estimate of 30.4x, the current 75.9x multiple is materially richer. Compared with the peer average P/E of 21.9x, the valuation also looks stretched, setting a high bar for future earnings delivery if the multiple is to hold up.
Explore the SWS fair ratio for Loma Negra Compañía Industrial Argentina Sociedad Anónima
Result: Price-to-Earnings of 75.9x (OVERVALUED)
However, there are clear risks, including the recent 84.7% earnings decline and a much thinner 2.8% net margin, which could challenge sentiment toward such a high P/E.
Another view: cash flow points to a different story
While the 75.9x P/E suggests Loma Negra is priced aggressively, the SWS DCF model points in the same direction. The current $10.97 share price sits above an estimated future cash flow value of $7.95. So is the market leaning too heavily on optimistic earnings forecasts?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Loma Negra Compañía Industrial Argentina Sociedad Anónima for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 58 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
The mixed picture on valuation and recent earnings can feel conflicting, so it is worth checking the full data set yourself and deciding how comfortable you are with the risks and rewards in front of you. To help frame that view, take a look at the 1 key reward and 1 important warning sign
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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