The average target price of SLND is 5.6 and suggests 19% 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 8.0. This translates into 68% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 4.0. This is equivalent to 16% downside potential in the worst case. 

Southland Holdings, Inc. engages in specialty infrastructure construction business in North America and internationally. The company operates through two segments, Civil and Transportation. The Civil segment designs and constructs water pipelines, pump stations, lift stations, water and wastewater treatment plants, concrete and structural steel, outfall, and tunneling. The Transportation segment designs and constructs bridges, roadways, marine, dredging, ship terminals and piers, and specialty structures and facilities. Southland Holdings, Inc. was founded in 1900 and is headquartered in Grapevine, Texas.

Southland Holdings, Inc.

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. 

SLND reported revenue of USD 932mn in the last 12 months, down 5% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach USD -2.58 in FY25.

The stock has been growing steadily in the past six months, adding 41% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 35ppts in total. 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 very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -11.4% in the last 12 months, a decline from 2.0% in FY23. 

Historically, SLND has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -11.8%, down from -1.7% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -9.1% in the last 12 months, a decrease from -1.7% in FY23. The market analysts predict that RoA will be -6.6% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -18.5%, below the peers. The consensus estimate for FY24 for RoCE is -4.9%, again behind the peers. 

Southland Holdings, Inc. reported a return on equity (RoE) of -53.6% in the last 12 months, down from -6.4% in FY23. The market consensus projects an RoE of -32.0% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.6 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 minimal. In combination with stringent business standards, shareholder rights are very highly protected.

SLND has very poor trading liquidity. It will take several trading days 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 small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is very high. Among the negative credit factors, we point to slow historical revenue growth, bleak profitability, negligible return on capital, poor working capital management, poor cash flow generation, and an unfavourable capital structure.

In highly turbulent market conditions, SLND 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, SLND 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 significant to immense. We would also like to highlight the substantial intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. In particular, the stock is of fair value on EV/EBITDA, trading at neutral levels on P/FC. 

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Southland Holdings, Inc.

$ 4.71

3

Southland Holdings, Inc.

$ 4.71

3

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$ 4.71

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