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Is Westwater Resources a Winner in the Metals & Mining Industry?

The shares of Westwater Resources (WWR) have plunged in price over the past year, reflecting poor investor sentiment. So, let's evaluate if it is worth investing in the stock now, given the company’s poor profitability. Read on.

Westwater Resources, Inc. (WWR) in Centennial, Colo., is dedicated to producing battery-grade natural graphite. The corporation owns a stake in the Coosa graphite project, which spans roughly 41,965 acres in Coosa County, Ala.

WWR’s shares have slumped 69.8% in price over the past year and 26.2% over the past three months to close yesterday's trading session at $1.69. In addition, the stock is currently trading 70.4% below its 52-week high of $5.7. 

Currently, the company has no revenue, has incurred repeated losses from its operations, and is also dependent on debt and equity financing and asset sales to sustain its operations.

Here is what could shape WWR's performance in the near term:

Inadequate Financials

WWR's operating expenses declined 62.2% year-over-year to $18.23 million for the year ended Dec. 31, 2021. Its net loss came in at $16.14 million, while its loss per share amounted to $0.49 over this period. In addition, its net cash used in operating activities grew 11.4% from its  year-ago value to $16.92 million.

Poor Profitability

WWR's trailing-12-months cash from operations stood at negative $16.92 million compared to the $199.60 million industry average. Also, its trailing-12-months ROA and ROC are negative  12.1% and negative 10.9%, respectively.

POWR Ratings Reflect Uncertainty

WWR has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. WWR has an F grade for Quality and a D for Stability. The company's poor profitability is in sync with the Quality grade. In addition, the stock’s 1.38  beta is consistent with the Stability grade.

Among the 37 stocks in the C-rated Industrial – Metals industry, WWR is ranked #35.

Beyond what I have stated above, you can view WWR ratings for Value, Momentum, Growth, and Sentiment here.

Click here to check out our Industrial Sector Report for 2022

Bottom Line

The shares of WWR have lost significant momentum over the past year and continue to retreat in price owing to the company’s lack of revenue and negative profit margins. The stock is currently trading below its 50-day and 200-day moving averages of $1.94 and $3.05, respectively, indicating bearish sentiment. Therefore, we believe the stock is best avoided now.

How Does Westwater Resources Inc. (WWR) Stack Up Against its Peers?

While WWR has an overall D rating, one might want to consider its industry peers, BHP Group Ltd. (BHP), Ryerson Holding Corporation (RYI), and Marubeni Corporation (MARUY) which have an overall A (Strong Buy) rating.

WWR shares were trading at $1.68 per share on Thursday morning, down $0.01 (-0.64%). Year-to-date, WWR has declined -21.86%, versus a -5.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.


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