Eramet SA (ERA) AI Stock Analysis

• Market Cap: €1.34B
• Dividend Yield: 3.27%
• Average Volume (3M): 30.68K
• Price to Earnings (P/E): 93.5
• Beta (1Y): 1.60
• Revenue Growth: -9.78%
• EPS Growth: -87.29%
• Country: FR
• Employees: 8,770
• Sector: Basic Materials
• Sector Strength: 68
• Industry: Industrial Materials
• EPS (TTM): 0.48
• Shares Outstanding: 28,755,047
• 10 Day Avg. Volume: 33,285
• 30 Day Avg. Volume: 30,685
• PEG Ratio: 0.02
• Price to Book (P/B): 1.35
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.62
• 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: €48.50
• Price Target Upside: 6.08% Upside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 2

• Rating: 45 Neutral
• Price Target: ―

Eramet SA's overall stock score is weakened by significant financial challenges, including declining revenue and profitability, high leverage, and liquidity issues. The technical analysis further reflects bearish trends, and the valuation suggests overvaluation despite a reasonable dividend yield.

Positive Factors

Financial Performance

Eramet should post a 35% increase in Q3 sales, see its EBITDA multiply by 4x in H2, and could double its profits again over 2025.

Market Conditions

Manganese ore prices have doubled following the shutdown of the world's second largest mine in Australia.

Valuation

Eramet remains particularly discounted, trading at less than 2x its adjusted EBITDA 2025e and less than 3x its underlying EBITDA multiple.

Negative Factors

Financial Performance

Eramet posted a net loss of €41 million in the first half of 2024.

Growth Prospects

With no further growth prospects (apart from lithium), Eramet can no longer hope for a fundamental revaluation of its share price.

Production Targets

The French diversified mining group announced that it was revising its manganese ore and nickel production targets sharply downwards.

Eramet SA Business Overview & Revenue Model

Company Description

Eramet SA is a leading French multinational mining and metallurgical company engaged in the extraction, processing, and sale of various metals and alloys. The company's operations are primarily divided into four main sectors: Manganese, Nickel, Mineral Sands, and Alloys. Eramet is known for its expertise in mining and producing manganese ore and alloys, nickel ore and ferronickel, and mineral sands products. Additionally, the company manufactures high-performance steels and alloys for a wide range of industries, including aerospace, energy, and automotive sectors.

How the Company Makes Money

Eramet SA generates revenue through the extraction and sale of raw materials and processed products. The Manganese segment is a significant revenue contributor, as Eramet is one of the world's largest producers of manganese ore and alloys, which are essential for steel production. The Nickel segment involves the mining and processing of nickel ore, producing ferronickel for stainless steel production. The Mineral Sands division deals with the extraction and processing of titanium dioxide and zircon, used in various industrial applications. The Alloys segment produces high-performance steels and alloys for demanding applications in industries such as aerospace and energy. Eramet's revenue model is supported by its global mining operations, processing facilities, and strategic partnerships that ensure a steady supply of materials to its customers worldwide.

Eramet SA Financial Statement Overview

Summary

Eramet SA's financial health is under strain with declining revenue, low profitability margins, high leverage, and significant cash flow challenges. While gross profitability is strong, the overall financial position is weak.

Income Statement

The income statement for Eramet SA shows significant volatility. The Gross Profit Margin for 2024 is approximately 58.45%, which is relatively strong, but the Net Profit Margin is only 0.48%, indicating challenges in translating revenue into net income. Revenue has decreased for two consecutive years, with a notable decline of 12.19% from 2023 to 2024. The EBIT Margin is low at 1.74%, and although the EBITDA Margin is better at 7.88%, these figures suggest profitability issues. Overall, while the company has a solid Gross Profit Margin, declining revenue and profitability margins are concerning.

Balance Sheet

Eramet SA's balance sheet presents mixed results. The Debt-to-Equity Ratio for 2024 is approximately 1.54, indicating a high level of debt relative to equity, which could expose the company to financial risk. The Return on Equity (ROE) is quite low at 0.97%, reflecting inefficiencies in generating profits from shareholder equity. The Equity Ratio stands at 22.28%, suggesting a lower reliance on equity financing. While the company maintains substantial total assets, the high leverage and low ROE are potential red flags.

Cash Flow

The cash flow analysis reveals significant challenges for Eramet SA. The company has experienced negative Free Cash Flow for the past two years, with a concerning decline of 52.06% from 2023 to 2024. The Operating Cash Flow to Net Income Ratio is negative, highlighting cash generation issues relative to reported profits. The Free Cash Flow to Net Income Ratio is also negative, suggesting that the company struggles to convert income into cash flow. These factors indicate that the company might face liquidity issues and difficulty in funding operations.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.93B	3.34B	5.01B	3.67B	2.79B
	Gross Profit
1.71B	2.00B	1.23B	762.00M	255.00M
	EBIT
51.00M	-193.00M	1.19B	721.00M	214.00M
	EBITDA
231.00M	209.00M	1.32B	1.15B	262.00M
	Net Income Common Stockholders
14.00M	109.00M	740.00M	298.00M	-675.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
0.00	1.61B	1.66B	1.18B	1.81B
	Total Assets
6.46B	6.28B	7.28B	6.35B	6.62B
	Total Debt
2.22B	2.23B	2.00B	2.11B	3.19B
	Net Debt
2.22B	1.14B	881.00M	1.32B	1.73B
	Total Liabilities
4.48B	4.28B	5.04B	5.02B	5.66B
	Stockholders Equity
1.44B	1.60B	1.78B	1.01B	725.00M
Cash Flow		Free Cash Flow
-812.00M	-534.00M	428.00M	461.00M	-4.00M
	Operating Cash Flow
-125.00M	172.00M	1.02B	773.00M	309.00M
	Investing Cash Flow
-306.00M	-557.00M	-538.00M	-421.00M	-375.00M
	Financing Cash Flow
-12.00M	269.00M	-60.00M	-1.03B	969.00M

Eramet SA Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 45.72
• 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 FR:ERA, the sentiment is Negative. The current price of 45.72 is below the 20-day moving average (MA) of 48.68, below the 50-day MA of 47.53, and below the 200-day MA of 53.51, indicating a bearish trend. The MACD of -0.16 indicates Positive momentum. The RSI at 38.71 is Neutral, neither overbought nor oversold. The STOCH value of 11.20 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:ERA.

Eramet SA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NEX	77 Outperform	€4.47B	15.69	15.96%	2.54%	9.70%	26.01%
ENGI	74 Outperform	€47.52B	11.96	14.36%	7.45%	-10.60%	85.80%
RUI	73 Outperform	€3.03B	8.89	12.53%	5.11%	0.21%	-3.73%
VIE	72 Outperform	€22.31B	19.80	13.14%	4.63%	-1.45%	14.74%
MT	64 Neutral	€22.10B	17.12	2.57%	1.84%	-8.59%	68.13%
Sector *	51 Neutral	$2.04B	-1.23	-21.09%	3.96%	2.90%	-30.45%
ERA	45 Neutral	€1.34B	93.48	0.92%	3.27%	-9.78%	-87.29%