Pirmadienis, 22 balandžio, 2024
US Stocks

ICL Group Ltd stock analysis

ICL Group Ltd is an Israeli chemical and agrochemical company. Founded in 1968 and headquartered in Tel Aviv, Israel, the group is one of the largest chemical companies in the world. It manufactures mineral-based products for the agricultural, food, and engineering materials markets. Its products include potassium and phosphate fertilizers, specialty fertilizers, functional ingredients, fire extinguishers, and magnesium products. Its main areas of activity are:

  • Agrochemistry: ICL Group Ltd manufactures and sells various agrochemical substances used in agriculture. These substances are employed to improve soil fertility, protect plants from diseases and pests, and enhance plant nutrition.
  • Mineral fertilizers: ICL Group Ltd produces and sells various mineral fertilizers used in agriculture. These fertilizers are utilized to improve soil fertility and enhance plant nutrition.
  • Specialty chemical substances: ICL Group Ltd manufactures and sells various specialty chemical substances used in various industrial sectors. These substances are used in the production of products in industries such as plastics, rubber, textiles, leather, electronics, medicine, and others.

ICL Group Ltd has factories and offices in more than 20 countries around the world.

Income distribution by business segments:

ICL Group Ltd Pajamos pagal segmentus
Income by segments

Market Analysis

ICL Group Ltd is one of the leaders in its industry, holding a 14% global market share in specialty fertilizers, an 11% global market share in bromine, and a 35% global market share in magnesium. The company maintains strong and long-term relationships with its customers and suppliers, constituting 70% of its sales. Additionally, the company invests in innovation and expansion to create new and high-quality products and solutions that meet market needs and trends.

The company’s primary markets are Europe, North America, and Asia. It takes advantage of favorable market conditions that stimulate demand for its products. For example, the growing population and food demand drive the demand for specialty fertilizers, which help increase yield and quality. The increasing demand for electric vehicles and batteries also boosts the demand for bromine and magnesium, crucial components for these products.

Company finances

The ICL Group experienced an average annual revenue growth of 4.46% over a 10-year period. This represents a very strong growth rate for a market leader with high revenues. In the latest financial year, the revenue growth reached an impressive 44%, and the earnings per share (EPS) increased by 178%. We believe that these results are indicative of intensive expansion efforts.

In the last year, the Gross margin has increased, reaching over 50%. This allowed the company to achieve a net profit margin of 21.56%. The growth rates of EPS are also pleasing. Over a 10-year period, the average annual EPS growth was 5%, while the average growth over the last 5 years has already approached nearly 42%.

The company heavily invests in the development of technology and long-term tangible assets. However, research constitutes only 1.35% of the Gross Income. For every one dollar invested in Long-Term Tangibles, it earns an average of 1.5 USD in EPS. This enables the company to achieve a high Return on Average Assets (ROAA) and an average Return on Average Equity (ROAE) of 19%.

The average annual growth of Retained profit over a 10-year period was 6.26%, while the return on equity (ROE) for the same period reached an impressive 31%. The company is a strong cash flow generator, and over a 5-year period, it returned an average of over 200% of Net Income to shareholders in the form of dividends.

If the owners of the company wanted to sell the business and invest the proceeds today (as of the time of writing) in U.S. 10-year Treasury bonds to achieve the same return as they did in 2022, they should sell the shares at $36 USD each.

Income forecast:

Forecast20232024
Revenue9 000 000 0008 400 000 000
Net profit955 000 000873 000 000
EPS0.740.68

Investment scoreboard:

ICL Group Ltd akcijų analizė
Investment scoreboard

ICL Group Ltd stock

ICL Group’s stocks are traded on the Tel Aviv and New York stock exchanges. The ticker in New York is ICL.

The company does not have a share buyback program but has established a Dividend Payment Policy, which stipulates allocating up to 50% of annual Net profit for dividends. The payment of dividends is not guaranteed. The dividend yield at the time of writing is 5.17% (according to NASDAQ) or 11.42% (according to Walmine). In any case, this represents a solid dividend yield. It is a dividend-paying stock.

In terms of fixed interest instruments, the market price is significantly undervalued. Using the GRAPES method, the calculated price perspective is nearly $19, indicating a potential investment return of over 30% in average annual growth. On the other hand, our method suggests a price perspective that would yield about 0.5% average annual return, which appears to be a more realistic outlook.

The stock beta are low, around 1.13. The calculated PEG ratio is also low, about 1.27. This is considering a 10-year period of EPS growth. Therefore, based on our evaluation, we do not expect such rapid EPS growth in the future, as what is currently observed is atypical for a large company and is more of an exception than a rule.

Therefore, the Equity Risk Premium can bring joy. It reaches as much as 9.74%. Because of this, the investment opportunities still seem attractive. The maximum expected price growth in the perspective can reach 9% on average annually. The minimum valuation promises us further price decrease.

ICL Group Ltd Price perspective
Price perspective

Price chart

Conclusions

During the writing period, we did not have shares of this company. However, they seem very enticing. I believe it’s worth noting until the financial year results are announced. There isn’t much time left to wait. Additionally, we will monitor investor behavior in the market. If the price changes its direction, we will also contribute.

Artificial Intelligence analysis

The analysis of ICL Group Ltd. shares indicates that this company may be worth investing in, but it depends on various factors.

Financial Indicators: The company’s financial indicators indicate a stable operational performance. In 2023, sales and operating revenues remained stable, and operating cash flows even increased slightly by 12%.

Stock Price: According to analysts’ forecasts, the stock price of ICL Group Ltd. is expected to increase by 57.97% over the next 12 months. This indicates that the stock price may be lower than the actual value of the company.

Dividends: The company pays dividends, which can be beneficial for investors seeking regular income.

Market Capitalization: The market capitalization of ICL Group Ltd. is 6.20 billion dollars, indicating that it is a large company with stable finances.

P/E ratio: The P/E ratio is 4.46, which is below the sector average. This may indicate that the stocks are undervalued.

Nevertheless, as a financial advisor, you know that investing is always associated with risk. Therefore, it is important to consider all these factors and conduct thorough research before making investments.

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Sources:

  • ICL Group Ltd oficiali svetainė: https://www.icl-group.com/
  • Nasdaq svetainė: https://www.nasdaq.com/market-activity/stocks/icl
  • Bloomberg svetainė: https://www.bloomberg.com/quote/ICL:US
  • Investicinis portalas Walmine: https://wallmine.com/nyse/icl

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