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On Wednesday, Jefferies restarted its coverage of RHI Magnesita (RHIM:LN) (OTC: RHHMY), a leading refractory product manufacturer, assigning the stock a Hold rating with a price target of GBP 32.80. The firm’s analysis acknowledges the company’s ability to produce robust financial outcomes amidst challenging conditions, yet anticipates constraints on future earnings growth in the fiscal year 2025.
The research highlighted that RHI Magnesita has been navigating through numerous challenges that could impede its financial performance. Despite these obstacles, the company has managed to maintain solid results, demonstrating resilience. However, Jefferies points out that the headwinds faced in the fiscal year 2025 might limit the company’s capacity to expand its earnings.
In terms of valuation, RHI Magnesita’s stock is currently trading at a significant discount compared to its industry peers. The firm’s estimated enterprise value to EBITA (EV/EBITA) ratio for the fiscal year 2025 stands at 8.7 times, which is lower than the 11.2 times average of UK Industrial companies. Despite this discount, Jefferies suggests that there are limited factors that could potentially trigger a reevaluation of the company’s market value.
The price target set by Jefferies, at 3,280 pence, implies a total shareholder return (TSR) of negative 3 percent. This forecast reflects the investment firm’s cautious stance on the stock’s potential for price appreciation in the near term. The Hold rating indicates that Jefferies does not currently see substantial upside or downside risks to the current stock price, advising investors to maintain their positions without adding or reducing exposure.
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