Common Stock: Pesquera Exalmar
Current Market Price: $1.35 PEN
Market Capitalization: $399 Million PEN
*All values in this article are expressed in United Stated Dollars (USD) unless otherwise noted.
**The bulk of this analysis is based on the company’s most recent audited financial report, which can be found by following this link.
Pesquera Exalmar Stock – Summary of the Company
Pesquera Exalmar is a Peruvian fishing company. They sell fresh and frozen fish as well as produce fishmeal and fish oil. The company has a fleet of 24 fishing vessels and 5 industrial fishmeal and fish oil factories. Pesquera Exalmar was founded in 1997 and is headquartered in Lima, Peru.
Revenue and Cost Analysis
Pesquera Exalmar has revenue of $266 million in 2019, an increase compared to $241 million in 2018. Their COGS was $220 million in 2019, representing a gross margin of 17.5%, a significant deterioration compared to 31.5% in 2018.
The company was profitable in each of the last two years. In 2019 Pesquera Exalmar had net income of $6.3 million, representing a profit margin of 2.4%, a significant deterioration compared to 12.2% the previous year. This decrease in profitability is due entirely to the company’s decreased gross margin discussed above.
Balance Sheet Analysis
Pesquera Exalmar has a weak balance sheet. Their liquidity position is poor and they are leveraged, with relevant debt obligations outstanding.
Pesquera Exalmar – Debt Analysis
As of year-end 2019 the company has $173.9 million in total debt outstanding, $20 million of which is classified as current.
Pesquera Exalmar Stock – Share Dynamics and Capital Structure
As of year-end 2019 the company has 295.5 million shares outstanding. Their majority shareholder, Caleta de Oro Holding, owns 66.5% of the company’s outstanding shares. Other institutional investors own an additional 17.5%, with the remaining 15% being owned by smaller shareholders.
Pesquera Exalmar Stock – Dividends
The company paid dividends of $0.23 cents (PEN) per share in 2019. At the current market price this implies a dividend yield of 17%.
Pesquera Exalmar Stock – 2 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$373 million / $240 million= 1.5
A debt to equity ratio of 1.5 indicates that Pesquera Exalmar is leveraged and relies on debt financing for a significant portion of its funding.
Working Capital Ratio
Current Assets/Current Liabilities
$135 million / $156 million= .86
A working capital ratio of .86 indicates a weak liquidity position. Pesquera Exalmar may have problems meeting its near term obligations and investors should carefully monitor the company’s liquidity position.
Pesquera Exalmar Stock – Summary and Conclusions
Pesquera Exalmar is a decent company. They have a presence throughout Peru and a global client base. However they company is weak financially. They have a weak liquidity position and are leveraged, with relevant debts outstanding. Although the company was profitable in both 2018 and 2019, margins deteriorated significantly year over year.
I am not willing to invest in Pesquera Exalmar stock. Investors can compare the company to other Latin American food producers, such as Brazilian meat producer Minerva.
Disclaimer
This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.
This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.
