The average target price of JALL3.SA is 10 and suggests 142% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 12.0. This translates into 189% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 8.0. This suggests 93% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Jalles Machado S/A produces, markets, and exports sugar, ethanol, and other by-products from sugarcane. The company offers crystal and organic sugar; hydrated, anhydrous, industrial, and organic ethanol; cleaning products; and yeast. It also produces clean and renewable energy from cane bagasse and straw. The company was founded in 1980 and is headquartered in Goianésia, Brazil.

Brazil

Jalles Machado S/A

Consumer Cyclical

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has been moderate and on par with its peers. At the same time, the average five-year yield has been significantly higher and exceeded most of its peers. On average, the company pays dividends annually. 

JALL3.SA reported revenue of BRL 2 187mn in the last 12 months, up 30% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach BRL 0.29 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 25ppts and its growth accelerated by 3ppts in the past month. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 35ppts and its growth decelerated by 5ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 60.3% in the last 12 months, a decline from 61.5% in FY23. 

Historically, JALL3.SA has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -1.6%, down from 1.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -0.5%, below the peers. The consensus estimate for FY24 for RoCE is 0.8%, again behind the peers. 

Jalles Machado S/A reported a return on equity (RoE) of -1.7% in the last 12 months, down from 1.0% in FY23. The market consensus projects an RoE of 0.1% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -0.5% in the last 12 months, a decrease from 0.3% in FY23. The market analysts predict that RoA will be 0.0% in FY24, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.6 in the past several years. This ratio implies a poor shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

JALL3.SA has average trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is usually very stable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth and robust profitability, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, excessive margin volatility, poor working capital management, and an unfavourable capital structure.

In highly turbulent market conditions, JALL3.SA is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, JALL3.SA is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. 

Considering past and projected metrics, the stock is distinctly 'cheaper' than its peers. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITD. 

Jalles Machado S/A

R$ 4.15

6

Jalles Machado S/A

R$ 4.15

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 4.15

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