Li-Cycle Holdings Corp. lithium-ion battery recycling company (LICY), headquartered in Mississauga, Canada, completed its public listing in August 2021, merging with Special Purpose Acquisition Company (SPAC) Peridot Acquisition Corp, and generating net proceeds of $ 527 million. dollars. He also recently announced that Koch Strategic Platforms will make a $ 100 million investment to support LICY’s rapidly expanding growth opportunities in North America, Europe and Asia.
The stock gained 15.5% over the past month and 52.1% over the past three months to close yesterday’s trading session at $ 12.95.
However, LICY’s losses widened in its fiscal third quarter. Additionally, its shares are currently trading 16.1% below their all-time high of $ 15.74, which they reached on February 16, 2021. Labor shortages and supply chain disruptions ongoing procurement makes the short-term outlook for the company bleak.
Here is what could influence the performance of LICY in the coming months:
Growth in results does not translate into improved results
For its fiscal third quarter, ended September 30, 2021, LICY’s revenue jumped 840% year-on-year to $ 1.70 million. The company’s total assets increased 306.4% year-on-year to $ 49.41 million.
However, its operating loss for the quarter increased 261.1% year-over-year to $ 6.22 million. And his net loss amounted to $ 6.90 million, an increase of 280.9% year-over-year. Its loss per share was $ 2.88, up 234.9% year-over-year.
Low profitability
In terms of 12-month asset turnover rate, LICY’s 0.09% rate is 89.1% lower than the industry average of 0.79%. In addition, the ROCE, ROTC and ROTATION are negative compared to the respective industry averages of 3.45%, 6.73% and 5.15%.
Stretched evaluation
In terms of forward P / S, LICY’s 279.93x is significantly higher than the industry average of 1.66x. Its 282.22x front EV / S is significantly above the 2.07x industry average. And the stock’s 4.16x forward P / B is 33.6% above the sector average 3.11x.
POWR ratings reflect grim prospects
LICY has an overall F rating, which equates to a strong sale in our POWR Rating system. POWR scores are calculated taking into account 118 separate factors, each factor being weighted to an optimal degree.
Our proprietary scoring system also rates each stock against eight distinct categories. LICY has a D rating for quality, which is in line with its lower profitability ratios than the industry.
LICY also has a D rating for growth and sentiment. This is justified because analysts expect its EPS to remain negative in the current quarter, current year, and next year.
The stock has a D rating for stability, which is consistent with its beta of 1.14. Additionally, LICY has a D rating for stock, which is in line with its higher valuation ratios than the industry.
LICY is ranked n ° 85 out of 87 shares in the Industrial – Services industry. Click here to also access LICY reviews for Momentum.
Final result
LICY is not expected to become profitable anytime soon as it could incur significant expenses in the short term. Because the stock looks overvalued at its current price point, we believe it is best to avoid it now.
How does Li-Cycle Holdings (LICY) compare to its peers?
While LICY has an overall POWR rating of F, one can consider investing in the following industry and service stocks with an A (strong buy) rating: Heritage-Crystal Clean, Inc. (HCCI), PT United Tractors Tbk (PUTKY) and Ryder System, Inc. (R).
Note that R is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
LICY shares were trading at $ 12.57 a share on Tuesday afternoon, down $ 0.63 (-4.77%). Year-to-date, LICY has gained 21.33%, compared to 25.81% for the benchmark S&P 500 during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal’s a passionate interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach he takes while advising investors in his articles. Following…