Ferroglobe PLC (GSM) Stock is Plummeting, Here is Why

Ferroglobe PLC (GSM) Stock is Plummeting, Here is Why


Many stocks have been testing new highs in 2020, and one of the most notable is Ferroglobe PLC (GSM). Currently, GSM is trading at $0.81 and the avg recommendation for the stock is Hold. while the current analyst price target stands at $1.25.

To add more color to this target, the company’s high over the last year is $2.00 and the low is $0.35. Over the last 52 weeks, GSM is down -59.74% while the S&P 500 is up 1.21%. The catalyst for this interesting swing was the company’s recent earnings report.

A Notable Earnings Report

In the last quarter, GSM reported a profit of $54.55 million. Ferroglobe PLC also saw revenues increase to $355.03 million. In addition, GSM has free cash flow of -$98.22 million as of 12-2019 The company’s EBITDA came in at $0.42 million which compares well with its peers.

About Ferroglobe PLC

If readers are unfamiliar, Ferroglobe PLC operates in the silicon and specialty metals industry in the United States, Europe, and internationally. The company offers silicone chemicals used in a range of applications, including personal care items, construction-related products, health care products, and electronics, as well as silicon metal for primary and secondary aluminum producers; silicomanganese, which is used as deoxidizing agent in the steel manufacturing process; and ferromanganese that is used as a deoxidizing, desulphurizing, and degassing agent in the removal of nitrogen and other harmful elements from steel. It also provides ferrosilicon products that are used to produce stainless steel, carbon steel, and various other steel alloys, as well as to manufacture electrodes and aluminum; calcium silicon, which is used in the deoxidation and desulfurization of liquid steel, and production of coatings for cast iron pipes, as well as in the welding process of powder metal; nodularizers and inoculants, which are used in the production of iron; and silica fume, a by-product of the electrometallurgical process of silicon metal and ferrosilicon. In addition, the company operates quartz mines in Spain, the United States, Canada, South Africa, and Mauritania; and low-ash metallurgical coal mines in the United States, as well as holds interests in hydroelectric power in Spain and France. It serves silicone chemical, aluminum, and steel manufacturers; auto companies and their suppliers; ductile iron foundries; manufacturers of photovoltaic solar cells and computer chips; and concrete producers. The company was formerly known as VeloNewco Limited and changed its name to Ferroglobe PLC in December 2015. The company was founded in 2015 and is headquartered in London, the United Kingdom. Ferroglobe PLC is a subsidiary of Grupo Villar Mir, S.A.U.

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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. GSM has a short ratio of 2.92 and outstanding shares of 156.75M.

Company Outlook

GSM has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 0.47 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at -2.05. Ferroglobe PLC GSM also noted assets of $1.72 billion at the end of the last quarter. Investors should also keep an eye on sector updates as GSM has historically followed its peers on positive news.

All told, Ferroglobe PLC GSM has strung together solid data and demonstrated underlying fundamentals. At its current valuation, GSM represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.

Ferroglobe PLC GSM is now commanding a market cap of 126.20M and a float of 71.35M. GSM is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of GSM stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in GSM, either long or short, and we have not been compensated for this article.