S & W Seed

Fundamenal analysis of S & W Seed Company (ticker: SANW), May 19, 2017

Black and green picture of grain icon with text about S & W Seed Company.

Update: 2 August, 2017

The company just made 2 cents per share last quarter. If this trend continues and S & W Seed makes 10 cents for the whole of 2017 the forward P/E ratio 34.5. The Price to Book value is still high at 2.5.

Looking at the Balance sheet things look a little better. The company has a Book value of $21 million which equates to $1.40 per share. The Working capital is $16 million which is good.

The company has a Free cash flow of $4.1 million which equals 27 cents per share. No dividends are paid out.

Conclusion:

Given the erratic earnings I would not be a buyer of S & W Seed at these prices.

 

 

Description:

S&W Seed Company is an agricultural company that is specializing in the breeding, growing and commercialization of alfalfa seeds.

 

Valuation:

SANW is expensive at trailing a P/E of 172. The average earnings over the past three years is looking even worse at a negative 6 cents.

Consequently the P/E ratio over the average three years is negative.

The Price to Book value is 2.5 which is high.

The earnings are to say the least erratic over the years. Last year they 2 cents per share and the year before the company had a loss of 25 cents per share.

The Shiller earnings since 2009 are a negative 4 cents.

 

Balance sheet:

Then we come to the balance sheet and here things looks a little better.

The Working capital is a solid $16,000,000 which equates to $1.08 per share.

The company has a Debt to equity ratio of 0.9 and a Current assets to Current liabilities ratio of 1.4.

 

Free cash flow and dividend:

The company has a good Free cash flow of $4,000,000, but they do not pay out any dividend which seems reasonable given their non-existent earnings.

 

Conclusion:

S & W Seed has great potential, but it is not an investment for me at current prices.

 

If you would like to learn more about fundamental analysis you can do that here.

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