Why Suncrete (RMIX) is on investors’ radar

Suncrete (RMIX) has drawn attention after a strong share price move over the past month, with the stock returning 46.5% across that period and 34.6% over the past 3 months.

That swing in momentum, with a 46.5% 1 month share price return and 35.1% year to date share price return, sits alongside a 39.4% 1 year total shareholder return at a latest close of $15.40.

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With Suncrete trading at $15.40 alongside an analyst price target of $22.00 and an estimated intrinsic discount of 21.25%, investors now face a key question: is there genuine upside left here, or is the market already pricing in future growth?

Preferred Price-to-Sales of 6.8x: Is it justified?

On a P/S basis, Suncrete looks expensive, with its 6.8x multiple sitting well above both the global Basic Materials industry and its own peer group.

The P/S ratio compares the company’s market value to its revenue, so a higher figure usually signals that investors are willing to pay more for each dollar of sales. For a business that is still loss making, as Suncrete is with a reported net loss of $11.16 million on $194.87 million of revenue, this can mean the market is placing a lot of weight on future revenue and earnings forecasts rather than current profitability.

Here, the gap is large. Suncrete’s 6.8x P/S is significantly higher than the global Basic Materials industry average of 1.2x and also above the peer average of 4.2x. Relative to an estimated fair P/S ratio of 3.6x, the current multiple sits at a premium that the market could eventually reassess if expectations change.

Result: Price-to-Sales of 6.8x (OVERVALUED)

However, the current $1.32b market cap, compared with a recent net loss of $11.16m and a premium 6.8x P/S, means any setback in revenue expectations could quickly pressure sentiment.

Another angle on value: SWS DCF says “undervalued”

While the 6.8x P/S ratio makes Suncrete look expensive, the SWS DCF model points the other way. With the stock at $15.40 and an estimated future cash flow value of $19.56, it screens as undervalued by about 21%. Which yardstick should matter more for you right now?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Suncrete 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 51 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

With mixed signals across valuation methods, it makes sense to review the underlying data yourself and decide how comfortable you are with the current setup. To weigh the concern around risks against the potential rewards, take a closer look at the 3 key rewards and 1 important warning sign

Looking for more investment ideas?

If Suncrete has caught your attention, do not stop here. Use targeted stock lists to quickly surface fresh ideas that fit your goals and risk comfort.

• Target higher yield opportunities by reviewing stocks screened as resilient income payers in the 12 dividend fortresses
• Sharpen your value hunt by scanning companies flagged as attractively priced with quality fundamentals in the 51 high quality undervalued stocks
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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.