The FTSE AIM index — or the Alternative Investment Market — contains a variety of stocks. But many of them are relatively small, higher-risk growth stocks. Among these is Jubilee Metals (LSE:JLP), a metal recovery firm operating in Zambia and South Africa.
I’ve previously written about this company and believed it could be a good addition to my portfolio. With recent results available, I want to analyse these to gauge if this business is still strong. Let’s take a closer look.
Recent results
On 8 February, the company released its operational update for the six months to 31 December 2021. A financial update followed in March. The operational update was overwhelmingly positive.
For the period, chrome concentrate production was up by 41% year on year. In addition, revenue from chrome concentrate increased by 28%. This is a mineral that’s used for steel and alloy production and traded by big businesses like Rio Tinto and BHP Group. The firm produced 80,000 tonnes of chrome concentrate per month during the second half of the 2020 calendar year.
What’s more, Jubilee Metals decided to upgrade its processing plant for platinum group metals (PGMs) in South Africa. Investing £17.5m, this allowed the production of 44,000 PGMs ounces for the period, compared with 30,000 ounces in the final six months of 2020.
Financial results for this FTSE AIM stock
In the final six months of 2021, revenue increased to £63.27m. This grew from £53.44m, year on year. Despite this, earnings before interest, taxes, depreciation, and amortisation (EBITDA) shrank from £29.33m to just £14.91m. While this may appear disappointing, it’s worth noting that the South African processing plant upgrade likely ate into these earnings.
I’ve already written elsewhere about Jubilee’s strong historical earnings. Suffice to say, between the 2019 and 2021 calendar years, earnings-per-share (EPS) rose by nearly 400%. This is growth at lightning speed and suggests the management is expanding the firm in a responsible way. It should be noted, however, that past performance is not necessarily indicative of future performance.
It’s also possible that Jubilee Metals is undervalued. By comparing its trailing price-to-earnings (P/E) ratio to a competitor, Central Asia Metals, we see that Jubilee’s 8.2 is lower than its rival’s 10.08. It’s always good to know that I might be getting a bargain when I invest in a business and I think Jubilee Metals might fit the bill. It currently trades at 14.7p, down 6.65% in the past year.
Overall, this is a business that’s growing and expanding. The recent operational updates are encouraging and production output is increasing. Although earnings have narrowed, I’m confident that this is a short-term issue that will subside over a longer period of time. I will be buying shares soon.
