The average target price of RBY.TO is 3.2 and suggests 67% 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 3.8. This translates into 95% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 2.8. This suggests 43% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Rubellite Energy Inc. engages in the exploration, development, production, and sale of heavy crude oil from the Clearwater Formation in Eastern Alberta. The company was incorporated in 2021 and is headquartered in Calgary, Canada. Rubellite Energy Inc. is a subsidiary of Perpetual Energy Inc.

Canada

Rubellite Energy Inc.

Energy

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. 

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). It has underperformed this peer group by 7ppts over six months and grown 7ppts faster 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 neutral.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 68.3% in the last 12 months, up from 65.2% in FY23. 

Historically, RBY.TO has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 27.5%, a growth from 21.6% in FY23. 

Rubellite Energy Inc. reported a return on equity (RoE) of 17.8% in the last 12 months, up from 7.9% in FY23. The market consensus projects an RoE of 10.1% in FY24, however, this time below its peers. 

Another important profitability metric, return on assets (RoA), amounted to 9.9% in the last 12 months, an increase from 4.8% in FY23. The market analysts predict that RoA will be 5.6% in FY24, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 11.4%, above the peers. The consensus estimate for FY24 for RoCE is 9.9%, however, this time below its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.5 in the past several years. This ratio implies a good 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.

RBY.TO 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. However, under highly turbulent market conditions, the trading volume tends to improve significantly. 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 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 minimal. We note resilient historical revenue growth, robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, RBY.TO 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, RBY.TO 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 moderate to substantial. We would also like to highlight the substantial intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is undervalued relative to its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITD. 

Rubellite Energy Inc.

CA$ 1.95

4

Rubellite Energy Inc.

CA$ 1.95

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CA$ 1.95

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