Exxaro Resources (EXX.JO)

Energy · JSE · South Africa

R199.64-6.22% today

Fundamentals

Market capR45.42B

P/E ratio6.1

Dividend yield10.31%

Revenue growth (YoY)-2.5%

Profit margin18.1%

Return on equity14.1%

52-week rangeR154.70 to R230.53

Valuation and ratings

DCF fair valueR270.13

Upside to fair value+35.3%

Analyst target (mean)R256.40

Analyst rangeR217.00 to R300.00

Analysts covering5

Consensus viewstrong buy

Moat score67/100

Overall rating80/100, Strong Buy

Exxaro Resources trades at R199.64, which is 35% below the R270.13 our discounted cash flow model puts on the business. On that measure alone it screens as undervalued, though a DCF is an argument rather than a measurement, and the market is frequently right about why something is cheap.

Our moat model scores it 67 out of 100, which is a moat, but not a deep one. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.

It changes hands at 6.1 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.

About Exxaro Resources

Exxaro Resources Limited engages in coal, pigment manufacturing, and renewable energy businesses in South Africa, Europe, Asia, and internationally. The company mines and supplies thermal coal, metallurgical coal, and semi-soft coking coal products primarily in the Waterberg and Mpumalanga regions; manufactures ferrosilicon powder; and provides iron ore. Its energy solutions business consists of 229 megawatts of wind power generation assets. The company was formerly known as Kumba Resources Limited and changed its name to Exxaro Resources Limited in November 2006. Exxaro Resources Limited was incorporated in 2000 and is based in Centurion, South Africa.

Industry: Thermal CoalHQ: South Africa

EXX.JO passes 6 of our 30 screens today

Each screen prints the exact criteria it used, and the circumstances in which it is wrong.

Undervalued on cash flow

Companies trading at least 25% below what our discounted cash flow model says the future cash is worth today.

Quality at a fair price

Good businesses, not cheap ones. A wide moat and a strong rating, at a multiple that has not run away.

Deep value, with a pulse

A very low earnings multiple is usually a warning. This screen demands a low multiple AND evidence the business still works.

Dividend powerhouses

Yields above 3%, filtered for the one thing yield screens never check: whether the company can actually afford it.

Fortress balance sheets

Companies that owe almost nothing. They will survive things that kill their competitors, and they can buy the wreckage afterwards.

Low volatility defensives

Companies that move less than the market and pay you to wait. The holdings that let you sleep, and let you hold everything else.

Common questions

Is Exxaro Resources (EXX.JO) undervalued?

Against our discounted cash flow estimate of R270.13, EXX.JO at R199.64 is 35% below fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.

What is EXX.JO's P/E ratio?

EXX.JO trades at 6.1 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.

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Open EXX.JO in the app Free guides and screens

Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.