巴西石化

Braskem SA is assigned a 3-star quantitative star rating, reflecting our opinion that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 16% discount to our quantitative fair value estimate of $2.11 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The company's valuation metrics strengthen our fair value estimate. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. For example, the firm's enterprise value to EBITDA ratio of 5.8 ranks in the bottom 20% compared with global peers. Relative to the company's EBITDA, the enterprise value of the business is low, which contributes to our view that shares are cheap.

Conversely, the company's lack of growth is potentially concerning. Stagnant revenue and earnings growth indicates a company's challenges in increasing market share and profitability. The firm's revenue 5-year growth of -5.4%, for example, sits in the bottom 20% compared with peers globally. Weak trailing five-year revenue growth is disappointing and could indicate trouble generating future value for shareholders, which, despite our favorable price/fair value ratio, is a negative attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has been a laggard relative to the broader universe over the past year. This underperformance makes the stock appear cheap, which portends a buying opportunity in light of other contributors to our model.

This company lacks a competitive advantage, receiving a quantitative economic moat rating of none. Additionally, the company's weak financial health rating could portend bankruptcy risk if economic conditions weaken.