MarketsMOJO Downgrades Howard Hotels to 'Sell' Due to Weak Long-Term Fundamentals

Howard Hotels, a microcap company in the hotel, resort, and restaurant industry, has recently received a 'Sell' rating from MarketsMOJO on October 1st, 2024. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's operating losses, which have been a consistent issue for Howard Hotels. In addition, their net sales have only grown at an annual rate of 5.35% over the last 5 years, indicating poor long-term growth potential.

Another concerning factor is the company's ability to service its debt, with a poor EBIT to Interest ratio of -0.27. This suggests that the company may struggle to meet its financial obligations in the future.

In terms of recent performance, Howard Hotels reported flat results in June 2024, with the lowest PBDIT and PBT LESS OI in the last quarter. Their EPS also saw a significant decline, reaching its lowest point at Rs -0.85.

However, there are some positive aspects to consider. The stock is currently in a bullish range and has shown a 9.06% return since September 5th, 2024. Additionally, multiple technical indicators, such as MACD, Bollinger Band, KST, and OBV, are all pointing towards a bullish trend.

From a valuation perspective, Howard Hotels has a fair valuation with a ROCE of 9 and an enterprise value to capital employed ratio of 2.1. The stock is also trading at a discount compared to its historical valuations.

It is worth noting that while the stock has generated a return of 99.04% in the past year, its profits have fallen by -101.7%. This could be a cause for concern for potential investors.

The majority shareholders of Howard Hotels are the promoters, which may indicate a lack of interest from external investors. However, the company has consistently generated returns over the last 3 years and has outperformed the BSE 500 index in each of the last 3 annual periods.

In conclusion, while Howard Hotels may have some positive aspects, the recent 'Sell' rating from MarketsMOJO and the company's weak long-term fundamentals suggest caution for potential investors.