Stock under pressure: Ferroglobe PLC (NASDAQ: GSM)

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Ferroglobe PLC (NASDAQ: GSM) stock plunged 17.55% on November 14th, 2018 (Source: Google finance). The company’s maximum and minimum EPS estimate for the current quarter is projected at $0.19 and $0.09, respectively, according to 5 analysts. Comparatively, Ferroglobe PLC posted earnings of $0.31 per share in the same quarter last year. The company is expected to report earnings of $0.16 a share for the next quarter.

GSM had in August announced that its Board of Directors has authorized the repurchase of up to $20 million of the Company’s ordinary shares in the period ending December 31, 2018. The Company has entered into Rule 10b5-1 repurchase plans with appointed brokers under which the Company will undertake purchases of its ordinary shares acquired by the brokers on the NASDAQ Global Select Market and through other permitted channels. The amount and timing of the share repurchases are subject to a number of factors, including Ferroglobe’s share price and trading volumes. Share repurchases under the program may be made through a variety of methods and the program does not oblige the Company to repurchase any specific number of shares. The Company intends to fund the repurchase program using existing cash and the proceeds of cash generating initiatives previously announced.

Meanwhile, in Q2 2018, Ferroglobe posted a net profit of $66.0 million, or $0.39 per share on a fully diluted basis. down 3.7% from Q1 2018 adjusted EBITDA of $89.6 million. The Company reported adjusted EBITDA margin of 14.8% for Q2 2018, compared to adjusted EBITDA margin of 16.0% for Q1 2018. Year-to-date (H1 2018) adjusted EBITDA was $175.9 million, up 135% from the same period in 2017.

The differences between reported and adjusted figures derive from the bargain purchase gain that has been recorded as a result of the Company’s acquisition of manganese alloys plants at Mo I Rana, Norway and Dunkirk, France.

During the second quarter, cash flow used for operations was $4.6 million, with working capital increasing by $70.0 million during the period. As a consequence, net debt was $475.3 million as of June 30, 2018, up from $449.3 million as of March 31, 2018. Sales in Q2 2018 totaled $583.0 million, up 4.0% from $560.7 million in Q1 2018.

During the second quarter, cash flows used for operations was $4.6 million, the main driver being a working capital increase of $70.0 million during Q2 2018. Approximately half of that increase is from the recently acquired manganese-alloy plants that have built their operating working capital, with a further increase from seasonally high raw materials and finished products inventories in the rest of our operations.

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