Is Greenpro Capital Corp. a Buy Under $1?
Currently trading at less than $1, financial and corporate services provider Greenpro capital (GRNQ) has been trying to expand its services through various differentiated strategies. Nevertheless, its shares have dipped...
Currently trading at less than $1, financial and corporate services provider Greenpro capital (GRNQ) has been trying to expand its services through various differentiated strategies. Nevertheless, its shares have dipped more than 56.4% in price so far this year. So, given the company’s weak fundamentals and poor growth prospects, is the stock worth owning now? Read more to find out.
Headquartered in Hong Kong, Greenpro Capital Corp. (GRNQ) is a business incubator with a broad business portfolio that includes finance, technology, banking, CryptoSx for STOs, health and wellness, and fine art. The company also manages venture capital businesses that specialize in business development for start-ups and high-growth enterprises in the fields of finance, technology, FinTech, and health and wellness.
The stock has declined 37.9% in price over the past year and 12.4% over the past three months. Furthermore, in closing its last trading session at $0.89, GRNQ is trading 78.6% below its 52-week high of $4.15, which it hit on February 17, 2021, indicating bearish sentiment.
Though the company is undertaking various strategies to boost its growth in the financial services industry, the stock’s steep valuation and weak fundamentals could lead to poor price performance in the near term.
Here’s what could influence GRNQ’s performance in the coming months:
GRNQ’s operating loss came in at $489.09 million for the second quarter, ended June 30, 2021. The company’s net loss increased 35.9% year-over-year to $770.02 million, while its loss per share was $0.01. Its operating expenses grew 38.3% from the prior-year quarter to $1.18 billion. In addition, its net cash used in operating activities increased 52.8% for the six months ended June 30, 2021, to $1.33 billion.
Its trailing-12-month EBITDA margin, ROTC, and ROA are negative 113.2%, 14%, and 39.2%, respectively. Furthermore, GRNQ’s 0.15% trailing-12month asset turnover ratio is 23.3% lower than the 0.2% industry average. Also, the company’s cash from operations stood at a negative $2.03 million.
In terms of trailing-12-months EV/Sales, GRNQ is currently trading at 20.53x, which is 553.3% higher than the 3.14% industry average. In addition, its 19.55x trailing-12-months Price/Sales compares to the 3.33x industry average. Furthermore, the stock’s 3.28x trailing-12-months Price/Book ratio is 162% higher than the 1.25x industry average.
Unfavorable POWR Ratings
GRNQ has a D overall rating, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated 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. GRNQ has an F grade for Stability, which indicates the stock’s higher volatility than its peers.
Also, the stock has a D grade for Value. This grade is consistent with the company's higher-than-industry valuation multiples.
Of the 103 stocks in the D-rated Financial services (Enterprise) industry, GRNQ is ranked #89.
Beyond what I have stated above, we have rated GRNQ for Growth, Sentiment, Momentum, and Quality. Get all GRNQ ratings here.
GRNQ’s weak financials and poor profitability do not justify its lofty valuation. Moreover, the company’s negative profit margins are expected to worsen due to increasing operating expenses. Thus, the stock is best avoided now.
How Does Greenpro Capital Corp. (GRNQ) Stack Up Against its Peers?
While GRNQ has an overall POWR Rating of D, one might want to consider looking at its industry peers, Forrester Research Inc (FORR) and CPI Card Group Inc. (PMTS), which both have an A (Strong Buy) rating.
GRNQ shares fell $0.89 (-100.00%) in premarket trading Monday. Year-to-date, GRNQ has declined -55.61%, versus a 19.82% 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.