Paragon Finance Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals

Paragon Finance, a microcap finance company, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 5.02%. Additionally, the company has shown poor long-term growth, with net sales declining at an annual rate of -2.51% and operating profit at -8.92%.
Despite positive results in June 2024, with the highest PAT (Q) at Rs 1.01 crore and EPS (Q) at Rs 2.38, MarketsMOJO still recommends selling the stock. The technical trend has improved from sideways to mildly bullish on October 9, 2024, and the key technical factor, MACD, has been bullish since then.

At a ROE of 4, Paragon Finance is fairly valued with a price to book value of 0.9. However, the stock is currently trading at a discount compared to its average historical valuations. While the stock has generated a return of 90.48% in the past year, its profits have only risen by 16.5%, resulting in a PEG ratio of 1.2.

The majority shareholders of Paragon Finance are the promoters, and the company has consistently generated returns over the last 3 years. In fact, it has outperformed BSE 500 in each of the last 3 annual periods, making it a reliable investment option for those looking for consistent returns. However, based on the recent downgrade by MarketsMOJO, it may be wise to approach this stock with caution.