Sims (SMSMY) AI Stock Analysis

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Sims

(OTC:SMSMY)

Rating:61Neutral

Price Target:

$10.50

▲(3.35%Upside)

The company's stock score is primarily influenced by its strong earnings call performance, highlighting increased margins and strategic initiatives. However, financial pressures from declining revenues and negative cash flow limit the score. Strong technical indicators provide positive momentum, while valuation concerns are flagged due to a negative P/E ratio.

Sims (SMSMY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.93B

Dividend Yield1%

Average Volume (3M)1.59K

Price to Earnings (P/E)―

Beta (1Y)1.12

Revenue Growth-19.77%

EPS Growth-175.77%

CountryUS

Employees3,887

SectorBasic Materials

Sector Strength68

IndustrySteel

Share Statistics

EPS (TTM)0.11

Shares Outstanding193,223,480

10 Day Avg. Volume0

30 Day Avg. Volume1,595

Financial Highlights & Ratios

PEG Ratio-0.57

Price to Book (P/B)0.97

Price to Sales (P/S)0.00

P/FCF Ratio13.74

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Sims Business Overview & Revenue Model

Company DescriptionSims Limited engages in buying, processing, and selling ferrous and non-ferrous recycled metals in Australia, Bangladesh, China, Turkey, the United States, and internationally. The company operates through six segments: North America Metals, Investment in SA Recycling, Australia/New Zealand Metals, UK Metals, Global Trading, and Sims Lifecycle Services. It is involved in the collection, processing, and trading of iron and steel secondary raw materials; and other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials. The company also engages in the provision of environmentally responsible solutions for the disposal of post-consumer electronic products, such as information technology assets recycled for commercial customers; and environmentally responsible recycling of negative value materials, including electrical and electronic equipment. In addition, it provides secondary processing and other services comprising recycling of municipal curbside materials, stevedoring, and other sources of service. Sims Limited was founded in 1917 and is headquartered in Mascot, Australia.

How the Company Makes MoneySims Limited generates revenue through a diversified model focused on the collection, processing, and sale of recycled metals and electronics. The company sources scrap metal and end-of-life electronics from a wide range of suppliers, including industrial manufacturers, demolition contractors, and the public. After processing these materials at its facilities, Sims sells the recycled metals to global markets, where they are used in manufacturing and construction. Additionally, the company's electronics recycling division provides asset recovery, data destruction, and materials recycling services. Key revenue streams include the sale of processed metals, fees for recycling services, and the sale of refurbished electronics. Strategic partnerships with manufacturers, government entities, and environmental organizations also enhance its competitive position and contribute to its earnings.

Sims Earnings Call Summary

Earnings Call Date:Feb 24, 2025

(Q2-2025)

% Change Since: 14.41%|

Next Earnings Date:Aug 19, 2025

Earnings Call Sentiment Positive

The earnings call presented a strong financial performance with increased margins and significant growth in the SLS segment. The company has successfully reduced costs and optimized its portfolio by selling non-core assets. However, challenges remain due to adverse market conditions and weather impacts. The Baltimore acquisition has not yet met expectations, and corporate costs remain high. Overall, the positive achievements in financial performance and strategic initiatives outweigh the challenges.

Q2-2025 Updates

Positive Updates

Strong Financial Performance

EBITDA and EBIT both increased substantially. Trading margin increased by 22% despite flat sales volumes, demonstrating a focus on margin over volume.

SLS Segment Growth

SLS showed strong performance with nearly 21% increase in revenue and a 2.2 percentage point increase in EBIT margin. SLS is expected to achieve around $30 million EBIT for FY '25, indicating a 60% compound growth rate since FY '20.

Cost Reduction Success

Achieved $64 million in annualized savings last year with a target for an additional $35 million in the current financial year.

Strategic Portfolio Optimization

Sale of the U.K. operations allowed for management focus on U.S. and ANZ markets. Potential further acquisitions and disposals to optimize the portfolio.

Improvement in Safety Measures

Significant reduction in serious injuries due to enhanced and standardized control measures in safety programs.

Negative Updates

Challenging Market Conditions

Ferrous prices on average lower than the previous year and continued global steel price challenges due to Chinese production.

Weather Impact on Operations

Extraordinarily cold and wet conditions in the U.S. have slowed the start of the year, affecting scrap collection and mill operations.

Underperformance of Baltimore Acquisition

Baltimore acquisition is not yet performing in line with pre-acquisition forecasts due to current market conditions.

High Corporate and Central Costs

Corporate costs remain high, with ongoing efforts to reduce these as part of the overall cost-out program.

Company Guidance

In the recent call, the company highlighted several key metrics and strategic decisions impacting its performance. Ferrous prices were on average lower compared to the first half of FY '24, while nonferrous prices were higher, continuing an 18-month trend. The company reported a significant improvement in safety, with leading indicators showing strength and a reduction in serious injuries. Financially, EBITDA and EBIT saw substantial increases, and trading margins improved by 22% despite flat sales volumes. The company detailed its focus on improving margins, reducing costs, and optimizing its portfolio through the U.K. sale and potential acquisitions. In North America, the company increased unprocessed ferrous scrap intake from mid-50% to nearly 70%, driving better utilization of shredders and a 31% increase in zorba sales. The company also responded to market dynamics by shifting sales between domestic and export markets, with domestic sales reaching 65% of total sales in February. The outlook remains cautious with regional market differences, but the company is positioned to benefit from U.S. policy shifts and growth in the hyperscaler data center market.

Sims Financial Statement Overview

Summary

Sims faces financial pressures, with declining revenues and profitability, increased leverage, and negative free cash flow. While the balance sheet remains stable, income and cash flow challenges pose significant risks. The overall financial outlook suggests the need for strategic interventions to stabilize and improve financial performance.

Income Statement

Neutral

The income statement shows a declining trend in revenue, with a significant drop from $9.26 billion in 2022 to $7.22 billion in 2024. Gross profit margin has also decreased considerably, indicating pressure on profitability. The company reported a net income loss in 2024, highlighting challenges in maintaining profitability. These factors contribute to a moderate to low score, reflecting both revenue and profit declines.

Balance Sheet

Neutral

The balance sheet reflects a stable equity base with a slight decline in stockholders' equity from 2023 to 2024. The debt-to-equity ratio has increased, indicating higher leverage, but it remains at a manageable level. The equity ratio is healthy, pointing to a solid capital structure. Despite increased debt, the company's overall financial health remains stable, resulting in a moderate score.

Cash Flow

Neutral

Cash flow analysis shows a decline in free cash flow, turning negative in 2024, which is concerning. Operating cash flow has decreased significantly from 2023, impacting liquidity. The free cash flow to net income ratio is unfavorable due to negative free cash flow. These factors are indicative of cash flow challenges, leading to a moderate score.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
6.76B	7.20B	8.08B	9.28B	5.93B	4.92B
	Gross Profit
906.40M	1.04B	844.30M	1.15B	852.20M	1.66B
	EBIT
408.40M	-117.80M	731.90M	323.90M	110.70M	-248.70M
	EBITDA
281.70M	381.00M	523.00M	491.90M	230.60M	-41.50M
	Net Income Common Stockholders
-114.20M	-57.80M	181.10M	599.30M	229.40M	-265.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
242.90M	280.80M	329.80M	267.50M	254.10M	243.10M
	Total Assets
4.47B	4.90B	4.71B	4.44B	3.68B	3.21B
	Total Debt
593.40M	949.30M	804.80M	701.70M	557.10M	480.40M
	Net Debt
392.30M	856.20M	496.10M	448.90M	316.80M	253.10M
	Total Liabilities
1.73B	2.34B	2.05B	1.90B	1.56B	1.22B
	Stockholders Equity
2.74B	2.56B	2.66B	2.54B	2.12B	1.98B
Cash Flow		Free Cash Flow
243.50M	-12.10M	218.70M	273.10M	800.00K	-205.80M
	Operating Cash Flow
448.50M	202.50M	449.20M	547.80M	129.40M	-65.30M
	Investing Cash Flow
-83.60M	-344.50M	-245.20M	-274.80M	-126.90M	-28.50M
	Financing Cash Flow
-377.70M	-75.50M	-155.00M	-259.70M	10.40M	-67.90M

Sims Technical Analysis

Technical Analysis Sentiment

Positive

Last Price10.16

Price Trends

50DMA

9.43

Positive

100DMA

9.18

Positive

200DMA

8.64

Positive

Market Momentum

MACD

0.14

Positive

RSI

60.40

Neutral

STOCH

38.15

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMSMY, the sentiment is Positive. The current price of 10.16 is above the 20-day moving average (MA) of 9.95, above the 50-day MA of 9.43, and above the 200-day MA of 8.64, indicating a bullish trend. The MACD of 0.14 indicates Positive momentum. The RSI at 60.40 is Neutral, neither overbought nor oversold. The STOCH value of 38.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SMSMY.

Sims Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SIM	74 Outperform	$4.47B	7.18	19.79%	―	-15.93%	86.43%
WS	68 Neutral	$1.27B	11.40	11.10%	2.56%	-6.82%	-36.02%
SMSMY	61 Neutral	$1.93B	―	-1.24%	1.00%	-19.77%	-175.77%
ZEUS	58 Neutral	$344.59M	21.49	2.95%	2.07%	-9.65%	-61.57%
RDUS	53 Neutral	$834.78M	―	-41.03%	2.53%	-2.75%	-339.59%
Sector *	51 Neutral	$2.03B	-1.27	-21.09%	4.14%	2.90%	-30.49%
SID	49 Neutral	$2.02B	―	-16.28%	11.86%	-9.84%	-14783.33%

* Basic Materials Sector Average

Performance Comparison

SMSMY

Sims

10.16

3.41

50.52%

SIM

Grupo Simec SA De CV

28.26

-3.23

-10.26%

SID

Companhia Siderúrgica Nacional

1.51

-0.76

-33.48%

ZEUS

Olympic Steel

31.06

-13.73

-30.65%

RDUS

Schnitzer Steel Industries

29.64

15.62

111.41%

Worthington Steel, Inc.

25.69

-4.46

-14.79%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.