Recrusul S/A manufactures and sells transport and industrial refrigeration equipment in Brazil and internationally. It offers truck trailers and tractors. The company was founded in 1954 and is based in Sapucaia do Sul, Brazil.

Brazil

Recrusul S/A

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. 

RCSL3.SA reported revenue of BRL 20mn in the last 12 months, down 65% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 253% from FY23 to BRL -0.65.

Over the past six months, the stock has consistently fallen, resulting in a 32% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 31ppts. 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 slightly unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -69.8% in the last 12 months, a decline from -1.9% in FY23. 

Historically, RCSL3.SA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -92.5%, down from -9.1% in FY23. 

Recrusul S/A reported a return on equity (RoE) of 216.2% in the last 12 months, up from -1085.9% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -34.2% in the last 12 months, a decrease from -8.5% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -57.8%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 4.7 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 close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

RCSL3.SA has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 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. We note low margin volatility and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, negligible return on capital, inadequate interest coverage, and poor cash flow generation.

In highly turbulent market conditions, RCSL3.SA 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, RCSL3.SA 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. 

Based on key historical and expected multiples, the stock is overvalued relative to its peers. 

Recrusul S/A

R$ 2.8

2

Recrusul S/A

R$ 2.8

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 2.8

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