Largo Resources (LGO) AI Stock Analysis

• Market Cap: $126.94M
• Dividend Yield: N/A
• Average Volume (3M): 28.37K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.51
• Revenue Growth: -36.34%
• EPS Growth: -66.53%
• Country: CA
• Employees: 500
• Sector: Basic Materials
• Sector Strength: 52
• Industry: Industrial Materials
• EPS (TTM): -1.06
• Shares Outstanding: 64,112,000
• 10 Day Avg. Volume: 37,000
• 30 Day Avg. Volume: 28,366
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.82
• Price to Cash Flow (P/CF): -5.60
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$5.54
• Price Target Upside: 179.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

Largo Resources is facing substantial financial challenges with negative profitability and declining revenues. While technical indicators point to a bearish trend, recent strategic initiatives and corporate events offer some optimism. The company's ability to navigate market challenges and capitalize on operational efficiencies will be critical for future performance.

Positive Factors

Cost Reductions

Recent cost reductions have already lowered cash operating costs excluding royalties to $3.67 per pound compared with $5.44 per pound previously.

Joint Venture

The formation of a joint venture with Stryten Energy could become a major force in the U.S. domestic vanadium production and supply chain.

Technical Report

The updated economic scenario from the technical report shows a substantial increase in mineral reserves and resources, with proven and probable reserves now totaling 101.0Mt, a 67% increase.

Negative Factors

Market Conditions

Largo's notable decrease in revenue was driven by a sharp decline in the company's production and further exacerbated by weakness in the market price of vanadium.

Production Challenges

A decrease in the effective ore grade mined and a decline in Largo's recovery rate impacted production results negatively.

Revenue Decline

The 32% YoY revenue decrease can be attributed to a significant decline in Largo's revenue per pound (lbs) of V to $6.46/lb (-25% YoY) since vanadium pricing remains quite weak.

Largo Resources Business Overview & Revenue Model

Company Description

Largo Resources Ltd. (LGO) is a Canadian-based natural resource company primarily engaged in the production and supply of vanadium. The company operates one of the highest-grade vanadium mines in the world, the Maracás Menchen Mine located in Brazil. Largo Resources focuses on the mining, production, and commercialization of vanadium products, which are essential in various industrial applications including steel manufacturing, aerospace, and energy storage solutions.

How the Company Makes Money

Largo Resources generates revenue primarily through the mining and sale of vanadium products. The company extracts vanadium ore from its Maracás Menchen Mine, processes it into different vanadium compounds, and sells these products to a global customer base. The key revenue streams include the sale of vanadium pentoxide, which is used in the production of ferrovanadium for steel strengthening, and vanadium trioxide, used in the aerospace industry. Additionally, Largo is expanding its presence in the renewable energy sector by developing vanadium redox flow batteries for energy storage, which represents a growing segment of its business. The company's earnings are also influenced by strategic partnerships with industrial manufacturers and fluctuations in global vanadium prices.

Largo Resources Financial Statement Overview

Summary

Largo Resources faces significant financial challenges with declining revenues and profitability. The balance sheet provides some stability, but cash flow issues and negative profit margins highlight operational inefficiencies and potential liquidity risks. Strategic changes may be necessary to improve financial health.

Income Statement

The income statement shows a declining trend in revenue from the previous year, with a significant negative net income leading to unfavorable net profit margins. The TTM (Trailing-Twelve-Months) period exhibits negative gross profit and EBIT margins, highlighting operational challenges. The EBITDA margin has also deteriorated, indicating reduced operational efficiency.

Balance Sheet

The balance sheet shows a moderate debt-to-equity ratio, which indicates some reliance on debt but not overly leveraged. However, the return on equity is negative due to losses, which is concerning. The equity ratio remains relatively healthy, providing some stability.

Cash Flow

Cash flow analysis reveals negative free cash flow growth and a weakened operating cash flow to net income ratio. These factors suggest potential liquidity challenges. However, the company maintains a positive operating cash flow, which provides some operational liquidity, albeit insufficient to cover capital expenditures.

Breakdown
TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
144.82M	198.68M	229.25M	198.28M	119.99M	107.18M
	Gross Profit
-14.02M	23.93M	59.53M	65.27M	31.60M	12.38M
	EBIT
-46.02M	-16.28M	16.97M	36.97M	18.80M	―
	EBITDA
-29.52M	3.82M	37.71M	69.45M	35.58M	19.69M
	Net Income Common Stockholders
-48.86M	-30.34M	-2.23M	22.57M	6.76M	―
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.26M	42.71M	54.47M	83.79M	79.14M	127.14M
	Total Assets
54.69M	381.62M	355.75M	313.91M	297.81M	356.83M
	Total Debt
0.00	76.53M	42.05M	17.55M	24.79M	0.00
	Net Debt
-1.26M	33.81M	-12.42M	-66.24M	-54.36M	-127.14M
	Total Liabilities
13.76M	125.82M	81.20M	48.21M	50.64M	85.40M
	Stockholders Equity
40.93M	248.65M	265.39M	265.70M	247.16M	271.43M
Cash Flow		Free Cash Flow
-31.41M	-32.51M	-42.18M	12.38M	-77.61M	68.05M
	Operating Cash Flow
9.26M	21.20M	3.46M	39.78M	-59.51M	106.63M
	Investing Cash Flow
-39.74M	-62.88M	-60.15M	-27.40M	-18.11M	―
	Financing Cash Flow
22.22M	29.13M	26.43M	-6.90M	30.23M	―

Largo Resources Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.98
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:LGO, the sentiment is Negative. The current price of 1.98 is below the 20-day moving average (MA) of 2.42, below the 50-day MA of 2.54, and below the 200-day MA of 2.64, indicating a bearish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 38.84 is Neutral, neither overbought nor oversold. The STOCH value of 13.85 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:LGO.

Largo Resources Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OR	71 Outperform	C$5.36B	240.72	1.33%	0.97%	6.02%	―
FM	58 Neutral	$14.14B	―	0.02%	―	-24.38%	99.06%
GMA	55 Neutral	C$13.62M	―	-58.91%	―	-83.85%	-24.32%
LGO	50 Neutral	$126.94M	―	-24.10%	―	-36.34%	-66.53%
Sector *	47 Neutral	$2.43B	-2.83	-21.77%	3.74%	4.16%	-28.83%
AVL	42 Neutral	$15.37M	―	-5.23%	―	―	-1118.18%

Largo Resources Corporate Events

Largo Resources Reports 2024 Financial Results and Announces Turnaround Plan Amid Market Challenges

Largo Resources reported a challenging financial year in 2024, with revenues declining by 37% compared to 2023 due to lower vanadium prices and market pressures. Despite these challenges, the company successfully implemented cost reduction measures, resulting in a significant decrease in operating costs and an improvement in adjusted cash operating costs per pound sold. The company also announced an operational turnaround plan to further optimize costs and enhance productivity at its Maracás Menchen Mine. The vanadium market faced downward pressure due to reduced demand and oversupply, impacting Largo’s financial performance. However, the company remains committed to improving its operational efficiency and market positioning.

Largo Resources Announces Strategic Production Initiative

Largo Resources, a company in the vanadium industry, has announced a strategic initiative aimed at enhancing its production capabilities. This move is expected to bolster its market position by improving operational efficiency and potentially increasing its market share. The initiative reflects Largo’s commitment to innovation and efficiency in response to evolving market demands.

Largo Inc. Reports 2024 Results and 2025 Outlook Amid Market Shifts

Largo Inc. reported a slight decrease in vanadium pentoxide production and sales for 2024 compared to the previous year, largely due to scheduled maintenance and market conditions. Despite these challenges, the company remains within its production and sales guidance, with significant increases in mineral reserves and resources extending the mine’s life. The vanadium market saw decreased prices and softened demand in Europe and China, while the aerospace sector remains strong and the U.S. steel market stable. Looking ahead, 2025 is expected to see continued demand in the U.S. steel and aerospace sectors, with China’s energy storage driving future vanadium consumption.

Largo and Stryten Energy Form Storion Energy to Boost U.S. Energy Storage

Largo Inc. has finalized a joint venture with Stryten Energy to form Storion Energy, aimed at strengthening U.S. energy resilience and addressing long-duration energy storage needs. This partnership creates a fully integrated vanadium electrolyte supply chain in North America, enhancing grid stability and energy security. Storion will leverage Largo’s vanadium supply, LPV’s innovative electrolyte leasing model, and Stryten’s manufacturing capabilities to provide cost-competitive solutions, positioning Largo as a leading supplier in the vanadium flow battery market.