Thursday, December 12, 2019

FLSmidth Not Expensive, But Weakening Mining Outlook Is A Real Concern

As a play on the late-cycle mining sector, FLSmidth (OTCPK:FLIDY) (FLS.CO) has simply not worked since my June 19 article. In fact, this diversified supplier of equipment to the mining and cement industries has been among the worst performers of the mining stocks I follow, with Epiroc (OTCPK:EPOKY) the only name in the group I follow to outperform the S&P over that time period.

FLSmidth’s underperformance has been driven by multiple earnings downgrades, which in turn have been driven by weaker service uptake, mining project cost overruns, project delays, and weaker-margin mining orders working through the P&L statement. Although a bullish stance on FLSmidth could well be throwing good money after bad, and there are risks to the mining equipment demand outlook, FLSmidth appears to be trading at an undemanding valuation and a stronger global economy in 2020 would likely drive some rerating in this laggard.

Readers should note that the U.S.-traded ADRs are not especially liquid.

Read more here:
FLSmidth Not Expensive, But Weakening Mining Outlook Is A Real Concern

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