The average target price of LJQQ3.SA is 4.1 and suggests 53% 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 6.2. This translates into 131% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 2.8. This suggests 3% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Lojas Quero-Quero S.A. engages in the general retail trade activities in Brazil. It offers building materials, household appliances, and furniture. The company also provides credit card, extended warranties, and financial services. As of December 31, 2021, it operated approximately 465 stores in 377 cities. The company was founded in 1967 and is headquartered in Cachoeirinha, Brazil.

Brazil

Lojas Quero-Quero 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 strong and significantly above 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. 

LJQQ3.SA reported revenue of BRL 2 666mn in the last 12 months, up 11% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 97% from FY23 to BRL 0.00. Market expects EPS to reach BRL -0.16 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. When compared to its international counterparts in the same sector and industry (as shown above), the stock has exceeded their performances, leading by 1ppts in total. 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 5ppts and accelerated its growth by 9ppts in the recent month. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 8.7% in the last 12 months, a decline from 10.2% in FY23. 

Historically, LJQQ3.SA has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.0%, down from 0.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 0.0% in the last 12 months, a decrease from 0.6% in FY23. The market analysts predict that RoA will be 0.6% in FY24, again weaker than its peers. 

Lojas Quero-Quero S.A. reported a return on equity (RoE) of 0.0% in the last 12 months, down from 3.7% in FY23. The market consensus projects an RoE of 3.9% in FY24, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 0.0%, below the peers. The consensus estimate for FY24 for RoCE is 5.4%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.0 in the past several years. This ratio implies a fragile 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.

LJQQ3.SA has average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually very stable and remains extremely 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 tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, poor working capital management, inadequate interest coverage, and an unfavourable capital structure.

In highly turbulent market conditions, LJQQ3.SA is moderately volatile. In other words, the stock will fall more 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 moderate. 

In normal market circumstances, LJQQ3.SA is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large to substantial. We would also like to highlight the substantial intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. In particular, the stock is overpriced on P/E, 'cheap' on EV/EBITDA, undervalued on P/FCF. 

Lojas Quero-Quero S.A.

R$ 2.68

4

Lojas Quero-Quero S.A.

R$ 2.68

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 2.68

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