South32 Stock Shows Every Sign Of Being Fairly Valued

GuruFocus.com
·4 min read

- By GF Value

The stock of South32 (ASX:S32, 30-year Financials) is estimated to be fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of AUD 2.88 per share and the market cap of AUD 13.6 billion, South32 stock gives every indication of being fairly valued. GF Value for South32 is shown in the chart below.


South32 Stock Shows Every Sign Of Being Fairly Valued
South32 Stock Shows Every Sign Of Being Fairly Valued

Because South32 is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 1.7% over the past five years.

Link: These companies may deliever higher future returns at reduced risk.

Since investing in companies with low financial strength could result in permanent capital loss, investors must carefully review a company's financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company's financial strength. South32 has a cash-to-debt ratio of 1.26, which ranks worse than 69% of the companies in Metals & Mining industry. Based on this, GuruFocus ranks South32's financial strength as 6 out of 10, suggesting fair balance sheet. This is the debt and cash of South32 over the past years:

South32 Stock Shows Every Sign Of Being Fairly Valued
South32 Stock Shows Every Sign Of Being Fairly Valued

It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. South32 has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of AUD 8.1 billion and loss of AUD 0.033 a share. Its operating margin is -8.56%, which ranks worse than 67% of the companies in Metals & Mining industry. Overall, GuruFocus ranks the profitability of South32 at 5 out of 10, which indicates fair profitability. This is the revenue and net income of South32 over the past years:

South32 Stock Shows Every Sign Of Being Fairly Valued
South32 Stock Shows Every Sign Of Being Fairly Valued

Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of South32 is 1.7%, which ranks in the middle range of the companies in Metals & Mining industry. The 3-year average EBITDA growth rate is -21.3%, which ranks worse than 80% of the companies in Metals & Mining industry.

Another way to look at the profitability of a company is to compare its return on invested capital and the weighted cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, South32's return on invested capital is -18.83, and its cost of capital is 7.38. The historical ROIC vs WACC comparison of South32 is shown below:

South32 Stock Shows Every Sign Of Being Fairly Valued
South32 Stock Shows Every Sign Of Being Fairly Valued

To conclude, The stock of South32 (ASX:S32, 30-year Financials) shows every sign of being fairly valued. The company's financial condition is fair and its profitability is fair. Its growth ranks worse than 80% of the companies in Metals & Mining industry. To learn more about South32 stock, you can check out its 30-year Financials here.

To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener.

This article first appeared on GuruFocus.

Recommended Stories

  • Why the Queen chose loyal lady-in-waiting Lady Susan Hussey for her loneliest journey

    It was her loneliest journey – but she was not alone. In her darkest day on public duty, the Queen had her loyal lady-in-waiting Lady Susan Hussey by her side. The monarch and Lady Susan, carried in the State Bentley for the short journey from the Sovereign's Entrance of Windsor Castle to the Galilee Porch of St George's Chapel, travelled in companionable silence. In quiet contemplation, the two women faced the cameras and the watching world with dignified calm. The Queen had personally asked Lady Susan to join her for the journey as she prepared to say farewell to her husband of 73 years. One of a close inner circle of ladies-in-waiting, Lady Susan has been by the Queen's side since the birth of Prince Andrew, when she joined the royal household to help answer a flood of letters. Known affectionately as "Number One Head Girl" in an office once likened to the cheery atmosphere of a girls' school common room, she has been described as one of the key trusted figures helping the Queen in her later life.

  • With FedEx shootings, America suffers 6th consecutive week with a mass killing

    Almost 50 people have died in eight shootings since March 13.

  • Father of teen arrested with AK47 in New York subway station was killed in police shootout

    18-year-old man from Ohio with assault rifle and wearing gas mask taken into custody

  • Prince Philip's great niece Princess Xenia of Hohenlohe-Langenburg: 'He was an idol to us'

    The historic family ties that prompted The Queen to invite German royalty Follow live updates from Prince Philip's funeral The Duke of Edinburgh's great niece, whose brother is in Windsor for his funeral on Saturday, has remembered Prince Philip as an "idol" for the younger generation of their family. Speaking from Munich, Princess Xenia of Hohenlohe-Langenburg said the Duke was a powerful role model to her and his "selflessness, lack of ego and sense of humour" will never be forgotten. Her tribute comes as the Queen prepares to say farewell to her husband of 73 years at Windsor Castle. "To all of us, he was an idol, he was somebody to look up to, we had enormous respect for him and it was always very exciting when he came to visit, and he came often," said Princess Xenia of Hohenlohe-Langenburg. "And this has become clear to me in the week since he's died - the way he lived his life, his motto, which was an unwritten motto for us, this discipline, this selflessness, this lack of ego, but also his sense of humour always underlying all of that.

  • Photos of Prince Harry and Prince William walking apart at Prince Philip’s funeral don’t show the whole picture of their relationship

    Prince Harry and Prince William walked separately at Prince Philip's funeral, with Peter Phillips separating them, as Buckingham Palace had planned.

  • How the Royals Wore Their Love and Respect at Prince Philip’s Funeral

    Chris Jackson/GettyThe queen has a brooch for every occasion—even the funeral of her husband, Prince Philip. The queen’s mourning clothes, though a stark contrast to her usual pastel ensembles, came accented with a special accessory that paid homage to her partner of 73 years.According to Express, the queen wore her Richmond Brooch on Saturday. It’s one of the largest in her collection, the paper reported, and was a wedding present for her grandmother Queen Mary’s nuptials in 1893. Usually the Queen wears the pin, made of diamonds, with a hanging pear-shaped pearl drop. But that feature was removed for the funeral.The sparkling accessory lit up the queen’s all-black look, and matched her face mask—also black, with white trim around the edges. The monarch sat alone through the funeral, which was pared-down due to the pandemic, like so many others.Prince Harry and Prince William Reunite After Prince Philip’s Funeral, Where the Queen Sat AloneBut the queen was not solitary in her statement jewelry. Kate Middleton also brought her own. Actually, it came from the queen: the Duchess wore a four-strand pearl necklace borrowed from Elizabeth’s collection.Today reports that it was made with pearls gifted from the Japanese government. Princess Diana wore the choker to a dinner in 1982.Kate’s matching pearl-drop earrings, which peeked out from underneath her netted black fascinator, were also from the Queen’s jewelry box. For the somber affair, the Duchess was able to sneak in a dash of glamour with her veil and Roland Mouret dress.One photographer caught Kate right before she exited her vehicle, and she stared straight into the camera’s lens. Such determined, direct eye contact isn’t something the Duchess is known for, but her look set the tone for a dignified, if very different, type of royal funeral.As had been previously reported, the royals did not wear military dress. Following their father and grandfather’s coffin, Prince Charles, Princess Anne, Prince Andrew, Prince Edward, Prince William, and Prince Harry were all seen wearing medals, a compromise reached after an internal debate in the royal family about the appropriate dress for Harry and Andrew.Camilla Parker Bowles wore pearls and a brooch that also dripped with significance. As Hello noted, she showed up in the so-called Bugle brooch, which honored Philip’s tenure as Colonel-in-Chief of The Rifles, an infantry regiment of the British Army.For his final public engagement last year, the Duke of Edinburgh passed on his position to Camilla, who is his daughter-in-law. So it’s a significant and symbolic jewelry choice for the day.Princess Eugenie, a new mother who named her infant son after Philip, wore a netted veil to the ceremony. It was similar to Kate’s, though Eugenie paired hers with an oversized black headband.Unlike the other women, Eugenie did not wear much jewelry, save for a simple pair of earrings. She did, however, wear a rather trendy Gabriela Hearst trench coat, per the Daily Mail.Penny Brabourne, Countess Mountbatten, a close friend of Philip’s and fellow equestrian, was one of the 30 guests who was not a direct family member. (She is married to Philip’s godson, Norton Knatchbull.) She wore a black pillbox hat and fitted suit, along with a crystal fern brooch.Of course Meghan Markle, who is pregnant, was unable to travel from Los Angeles with Prince Harry. She might not have been there in person—the former Duchess reportedly watched from home—but Meghan ensured a part of her was present. Per The Daily Mail, Meghan left a handwritten note on a wreath left at the chapel. The royal family did not speak at the event. Emotions were expressed in other ways. Some of it was literal, like when Sophie, the Countess of Wessex wiped away tears in the chapel. Some of it was more symbolic, like the queen sitting alone while bidding goodbye to her husband. Or William and Harry chatting after the ceremony, two estranged brothers brought together through grief. And much of it was through fashion: small nods to history, and hand-me-downs representing the continuation of longstanding royal tradition. Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

  • Fox News host Sean Hannity describes Chicago police shooting victim Adam Toledo as a '13-year-old man'

    There was outrage on social media after Fox News host Sean Hannity described the Chicago police shooting victim Adam Toledo as a "13-year-old man."

  • Biden admin backtracks on keeping Trump-era refugee cap after backlash

    FOX News correspondent Rich Edson has the latest developments on 'Special Report'

  • Retired Ohio sheriff and K-9 partner die the same day

    The Ohio county sheriff and his tiny police dog were inseparable, their lives unwaveringly intertwined. It thus seems fitting that retired Geauga County Sheriff Dan McClelland, 67, and his crime-fighting partner Midge, 16, would both die on Wednesday — McClelland at a hospital after a lengthy battle with cancer, and Midge a few hours later at home, perhaps of a broken heart.

  • Judge denies Ghislaine Maxwell's motions to toss sex charges

    A judge on Friday rejected Ghislaine Maxwell’s arguments to toss charges that she recruited three teenager girls from 1994 to 1997 for then-boyfriend Jeffrey Epstein to sexually abuse. U.S. District Judge Alison Nathan in Manhattan denied claims that a non-prosecution agreement Epstein reached with federal prosecutors over a dozen years ago protects Maxwell from prosecution. The judge, however, did agree that Maxwell can be prosecuted separately on perjury charges.

  • Fox’s Sean Hannity refers to Adam Toledo as ’13-year-old man’

    Fox’s Sean Hannity is being called out for labeling a 13-year-old police brutality victim as a man. On Thursday, Hannity discussed the tragic story of Adam Toledo, a 13-year-old boy who was shot by police in Chicago last month, but labeled the young teen as a man.

  • Latina grandmother assaulted on LA bus in anti-Asian attack

    A 70-year-old woman was getting off a bus in LA when another passenger dragged her to the other end of the vehicle and beat her, her son says

  • ‘Godzilla’ shark discovered in New Mexico gets formal name

    The 300-million-year-old shark’s teeth were the first sign that it might be a distinct species. “Great for grasping and crushing prey rather than piercing prey,” said discoverer John-Paul Hodnett, who was a graduate student when he unearthed the first fossils of the shark at a dig east of Albuquerque in 2013. This week, Hodnett and a slew of other researchers published their findings in a bulletin of the New Mexico Museum of Natural History & Science identifying the shark as a separate species.

  • Prince Harry and Meghan Markle Might Name Their Daughter After Princess Diana

    According to United Kingdom betting companies, that is.

  • Matz marvels as Jays beat Royals 5-1 in doubleheader opener

    Steven Matz held the Kansas City Royals without a hit into the sixth inning, and Jonathan Davis and Vladimir Guerrero Jr. homered to give the Toronto Blue Jays a 5-1 victory in the seven-inning opener of their doubleheader Saturday. Matz (3-0) only allowed a pair of walks before Nicky Lopez's blooper to left with one out in the sixth. Matz gave up Andrew Benintendi's two-out double later in the inning for the only other blemish on an otherwise dominant performance.

  • ‘This is a racial issue.’ Boy punished for hairstyle at Texas school, mom says

    The boy’s hair was styled into a braid.

  • Russia to expel 10 U.S diplomats, ban top Biden officials in response to sanctions

    Russia will expel 10 U.S. diplomats and add eight current and former U.S. officials to its no-entry list in retaliation for sanctions that the Biden administration leveled at Moscow on Friday, Russian foreign minister Sergey Lavrov said Friday.Why it matters: The measures come after the U.S. said it would expel 10 Russian intelligence officers operating under diplomatic cover, as part of a broad package of sanctions retaliating against the SolarWinds hack of federal agencies and Russia's interference in the 2020 election.Stay on top of the latest market trends and economic insights with Axios Markets. Subscribe for freeDetails: The following Americans have been banned from Russia ...Attorney General Merrick GarlandBureau of Prisons Director Michael CarvajalHomeland Security Secretary Alejandro MayorkasWhite House domestic policy czar Susan RiceFBI Director Christopher WrayDirector of National Intelligence Avril HainesFormer White House national security adviser John BoltonFormer CIA Director Robert James Woolsey Jr.The big picture: In addition to expelling 10 Russians on Thursday, the U.S. sanctioned dozens of Russian officials and entities and set new restrictions on buying Russian sovereign debt."The United States is not looking to kick off a cycle of escalation and conflict with Russia. We want a stable, predictable relationship," Biden said in a speech on Thursday afternoon, warning Russia not to continue interfering U.S. elections.Biden has proposed meeting Russian President Vladimir Putin for a summit in a European country this summer "to find a stable and predictable way forward," according to a senior administration official. It's unclear whether Putin will accept.What to watch: Lavrov said at a press conference that the Kremlin is considering imposing "painful" costs on U.S. businesses operating in Russia in retaliation for the sanctions, per Reuters.Go deeper: Biden's Russia sanctions likely to achieve littleLike this article? Get more from Axios and subscribe to Axios Markets for free.

  • Trump rape accuser adds to former president's legal woes by asking court to keep defamation lawsuit alive

    The former Elle columnist E. Jean Carroll published an account accusing Trump of raping her in a Bergdorf Goodman dressing room in the mid-1990s.

  • Derek Chauvin trial: 3 questions America needs to ask about seeking racial justice in a court of law

    A demonstration outside the Hennepin County Government Center in Minneapolis on March 29, 2021, the day Derek Chauvin's trial began on charges he murdered George Floyd. Stephen Maturen/Getty ImagesThere is a difference between enforcing the law and being the law. The world is now witnessing another in a long history of struggles for racial justice in which this distinction may be ignored. Derek Chauvin, a 45-year-old white former Minneapolis police officer, is on trial for second-degree murder, third-degree murder, and second-degree manslaughter for the May 25, 2020, death of George Floyd, a 46-year-old African American man. There are three questions I find important to consider as the trial unfolds. These questions address the legal, moral and political legitimacy of any verdict in the trial. I offer them from my perspective as an Afro-Jewish philosopher and political thinker who studies oppression, justice and freedom. They also speak to the divergence between how a trial is conducted, what rules govern it – and the larger issue of racial justice raised by George Floyd’s death after Derek Chauvin pressed his knee on Floyd’s neck for more than nine minutes. They are questions that need to be asked: 1. Can Chauvin be judged as guilty beyond a reasonable doubt? The presumption of innocence in criminal trials is a feature of the U.S. criminal justice system. And a prosecutor must prove the defendant’s guilt beyond a reasonable doubt to a jury of the defendant’s peers. The history of the United States reveals, however, that these two conditions apply primarily to white citizens. Black defendants tend to be treated as guilty until proved innocent. Racism often leads to presumptions of reasonableness and good intentions when defendants and witnesses are white, and irrationality and ill intent when defendants, witnesses and even victims are black. An activist watches the murder trial of former Minneapolis police officer Derek Chauvin outside the Hennepin County Government Center in Minneapolis on March 30, 2021. Kerem Yucel / AFP/via Getty Images Additionally, race affects jury selection. The history of all-white juries for black defendants and rarely having black jurors for white ones is evidence of a presumption of white people’s validity of judgment versus that of Black Americans. Doubt can be afforded to a white defendant in circumstances where it would be denied a black one. Thus, Chauvin, as white, could be granted that exculpating doubt despite the evidence shared before millions of viewers in a live-streamed trial. 2. What is the difference between force and violence? The customary questioning of police officers who harm people focuses on their use of what’s called “excessive force.” This presumes the legal legitimacy of using force in the first place in the specific situation. Violence, however, is the use of illegitimate force. As a result of racism, Black people are often portrayed as preemptively guilty and dangerous. It follows that the perceived threat of danger makes “force” the appropriate description when a police officer claims to be preventing violence. This understanding makes it difficult to find police officers guilty of violence. To call the act “violence” is to acknowledge that it is improper and thus falls, in the case of physical acts of violence, under the purview of criminal law. Once their use of force is presumed legitimate, the question of degree makes it nearly impossible for jurors to find officers guilty. Floyd, who was suspected of purchasing items from a store with a counterfeit bill, was handcuffed and complained of not being able to breathe when Chauvin pulled him from the police vehicle and he fell face down on the ground. Footage from the incident revealed that Chauvin pressed his knee on Floyd’s neck for nine minutes and 29 seconds. Floyd was motionless several minutes in, and he had no pulse when Alexander Kueng, one of the officers, checked. Chauvin didn’t remove his knee until paramedics arrived and asked him to get off of Floyd so they could examine the motionless patient. If force under the circumstances is unwarranted, then its use would constitute violence in both legal and moral senses. Where force is legitimate (for example, to prevent violence) but things go wrong, the presumption is that a mistake, instead of intentional wrongdoing, occurred. An important, related distinction is between justification and excuse. Violence, if the action is illegitimate, is not justified. Force, however, when justified, can become excessive. The question at that point is whether a reasonable person could understand the excess. That understanding makes the action morally excusable. Minneapolis Police Chief Medaria Arradondo testified, Court TV via AP, Pool 3. Is there ever excusable police violence? Police are allowed to use force to prevent violence. But at what point does the force become violence? When its use is illegitimate. In U.S. law, the force is illegitimate when done “in the course of committing an offense.” Sgt. David Pleoger, Chauvin’s former supervisor, stated in the trial: “When Mr. Floyd was no longer offering up any resistance to the officers, they could have ended their restraint.” Minneapolis Police Chief Medaria Arradondo testified, “To continue to apply that level of force to a person proned-out, handcuffed behind their back, that in no way, shape or form is anything that is by policy.” He declared, “I vehemently disagree that that was an appropriate use of force.” That an act was deemed by prosecutors to be violent, defined as an illegitimate use of force resulting in death, is a necessary conclusion for charges of murder and manslaughter. Both require ill intent or, in legal terms, a mens rea (“evil mind”). The absence of a reasonable excuse affects the legal interpretation of the act. That the act was not preventing violence but was, instead, one of committing it, made the action inexcusable. The Chauvin case, like so many others, leads to the question: What is the difference between enforcing the law and imagining being the law? Enforcing the law means one is acting within the law. That makes the action legitimate. Being the law forces others, even law-abiding people, below the enforcer, subject to their actions. If no one is equal to or above the enforcer, then the enforcer is raised above the law. Such people would be accountable only to themselves. Police officers and any state officials who believe they are the law, versus implementers or enforcers of the law, place themselves above the law. Legal justice requires pulling such officials back under the jurisdiction of law. The purpose of a trial is, in principle, to subject the accused to the law instead of placing him, her, or them above it. Where the accused is placed above the law, there is an unjust system of justice. This article has been updated to correct the charges Chauvin is facing. [Deep knowledge, daily. Sign up for The Conversation’s newsletter.]This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Lewis R. Gordon, University of Connecticut. Read more:Derek Chauvin trial begins in George Floyd murder case: 5 essential reads on police violence against Black menPolice officers accused of brutal violence often have a history of complaints by citizensWhite supremacy is the root of all race-related violence in the US Lewis R. Gordon does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

  • ‘Godzilla Shark’ with 12 rows of teeth now has an official name — inspired by dragons

    The creature lived 300 million years ago.