Protect Pharmaceutical Corporation primarily focuses on crop farming and agricultural businesses. It acquires the Can Noguera property located in Selva Girona region in Spain. Its property consists of 60 hectares of arable land, 390 hectares of forests, 6 mineral and freshwater wells, and 3000 square meters of built properties. The company was formerly known as Pro-Tect, Inc. and changed its name to Protect Pharmaceutical Corporation in March 2010. Protect Pharmaceutical Corporation was founded in 1987 and is based in Las Vegas, Nevada.

Protect Pharmaceutical Corporation

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

PRTT reported revenue of USD 176mn in the last 12 months, up 29% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 25% from FY23 to USD 1.00.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 14ppts over past six months and grown 10ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 33.5% in the last 12 months, a decline from 34.9% in FY22. 

Historically, PRTT has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 32.6%, down from 33.7% in FY22. 

In the last 12 months, the return on capital employed (RoCE) declined to 20.1%, above the peers. 

Protect Pharmaceutical Corporation reported a return on equity (RoE) of 20.1% in the last 12 months, down from 32.5% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to 15.5% in the last 12 months, a decrease from 23.7% in FY22. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.4 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

PRTT has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. 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 minimal. We note resilient historical revenue growth, robust profitability, solid return on capital, strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to excessive margin volatility, poor working capital management, and poor cash flow generation.

In highly turbulent market conditions, PRTT is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, PRTT is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

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

Protect Pharmaceutical Corporation

$ 1.14

4

Protect Pharmaceutical Corporation

$ 1.14

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 1.14

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