Sequent Scientific Receives 'Sell' Rating Due to Weak Fundamentals and Expensive Valuation

Sequent Scientific, a smallcap pharmaceutical company, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, with a negative CAGR growth of -200.35% in operating profits over the last 5 years. Additionally, the company's return on equity (avg) of 7.53% indicates low profitability per unit of shareholders' funds.
Furthermore, Sequent Scientific's valuation is considered expensive with a 4.7 enterprise value to capital employed and a ROCE of 6.4. However, the stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 92.74%, while its profits have only risen by 128.3%, resulting in a PEG ratio of 1.9.

Other factors contributing to the 'Sell' rating include the company's positive results for the last 3 consecutive quarters, with PBT LESS OI(Q) growing at 160.19% and PAT(Q) growing at 136.9%. The company's ROCE(HY) is also at its highest at 7.36%. Technically, the stock is in a mildly bullish range, with multiple indicators such as MACD, Bollinger Band, and KST showing bullish signals.

Institutional investors have also increased their stake in Sequent Scientific by 2.68% over the previous quarter, collectively holding 16.44% of the company. This suggests that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors.

Despite the recent downgrade, Sequent Scientific has outperformed the market (BSE 500) with a return of 92.74% in the last year, compared to the market's return of 23.90%. However, with the company's weak long-term fundamentals and expensive valuation, investors may want to consider the 'Sell' rating and carefully evaluate their investment decisions.