$Nexa Resources (NEXA.US)$It is a Luxembourg company that wa...

After falling from 31.4% to 16.6% over the past 5 years, gross margin rebounded to 25%. The return on net assets fell from 4.8% to a large loss range with the decline in gross margin. It was only in 2021 that the loss was reversed to 8.3%. Both figures did not look very attractive.

Overall revenue has not changed much in the past 5 years. There were major declines in 2019 and 2020, and returned to a 5-year high in 2021. Operating profit declined sharply in both 2018 and 2019, and rebounded in 2020 and 2021, but it did not surpass the 2017 high. Net profit declined in 2018, slipped into a loss range in 2019 and 2020, and was only reversed in 2021. The overall net profit loss for 5 years was still around 400 million.

Revenue, operating profit, and net profit increased by 20.4%, 19.9%, and 28.6% respectively in the first two quarters of 2022, and growth continues.

The income statement shows that interest expenses have reached 30% of operating profit, which is a heavy burden. The depreciation of capital assets reached 140 million and $560 million respectively in 2019 and 2020, which is the main reason for the sharp losses in these two years. The impact of this factor is also very difficult to estimate in the future.

The balance sheet shows an increase of 116 million in inventory in 2021, compared to a net profit of 156 million for the year. Inventories increased by a further $169 million in the first two quarters of 2022, and the pace of growth was not normal.

Currently, the price-earnings ratio is 6.9, and the price-earnings ratio is TTM 5.1, which is not very attractive.