The average target price of MDNE3.SA is 19 and suggests 26% 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 20.6. This translates into 39% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 18.5. This suggests 25% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Moura Dubeux Engenharia S.A. provides real estate development services in Brazil. It engages in the purchase and sale of properties; rental and split of land allotment; real estate construction of properties; management and administration of own or third parties real properties; and provision of engineering services. The company develops service flats, hotels, and resorts. It also provides technical construction management and advisory services to the condominiums. The company was founded in 1983 and is headquartered in Recife, Brazil.

Brazil

Moura Dubeux Engenharia S.A.

Real Estate

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. 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 lower, at very close to zero. 

MDNE3.SA reported revenue of BRL 1 570mn in the last 12 months, up 36% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 62% from FY23 to BRL 2.99. Market expects EPS to reach BRL 3.04 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). Over the past six months the stock has exceeded the performance of this peer group by 7ppts and its growth accelerated by 16ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 21.1% in the last 12 months, up from 17.5% in FY23. 

Historically, MDNE3.SA has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 16.0%, a growth from 13.5% in FY23. 

Moura Dubeux Engenharia S.A. reported a return on equity (RoE) of 17.5% in the last 12 months, up from 12.4% in FY23. The market consensus projects an RoE of 19.7% in FY24, again ahead of its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 8.1%, above the peers. The consensus estimate for FY24 for RoCE is 11.5%, again ahead of the peers. 

Another important profitability metric, return on assets (RoA), amounted to 6.6% in the last 12 months, an increase from 5.0% in FY23. The market analysts predict that RoA will be 7.7% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.0 in the past several years. This ratio implies a strong 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.

MDNE3.SA has below average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually very stable and is somewhat unfavourable 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, strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, MDNE3.SA is volatile. In other words, the stock will fall much 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 large. 

In normal market circumstances, MDNE3.SA is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to notable. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITDA, overvalued on P/FCF. 

Moura Dubeux Engenharia S.A.

R$ 15.06

5

Moura Dubeux Engenharia S.A.

R$ 15.06

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 15.06

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