Thanks
Chris M.
In its recent earnings release, GRA reported EPS of ($0.02) missing estimates of ($0.0129) and revenues of $28.94M missed expectations of $31.94M. Revenues grew by 6%, and its gross margins on revenues from customers showed significant improvement, rising from 11.6% for the same period in the prior year to 19.7% in the recent quarter. It achieved positive adjusted EBITDA in its Advanced materials, plastics and composite products segment, but its batter cells segment reported negative adjusted EBITDA. Sales are expected to improve nicely in the coming years and it anticipates being profitable in a few years. Its margins have improved over the years and it trades at a cheap valuation, but it continues to generate negative free cash flows and issues shares to fund operations.
We feel that while its fundamentals are improving, it does not have a great track record of beating expectations, and this is likely an area of concern for investors trying to forecast its sales and earnings growth into the future. We think it looks OK, higher risk, but would prefer more consistency in its actual earnings vs. estimates.