Buy Or Fear Tronox Stock?
Tronox (NYSE:TROX) stock appears to be unattractive – rendering it a poor choice to purchase at its present price of roughly $5.70. We think that there are multiple significant issues with TROX stock, making it unappealing even though its current valuation is quite low.
We come to our conclusion by comparing the present valuation of TROX stock to its operational performance over the past few years, along with its current and historical financial health. Our examination of Tronox based on essential parameters such as Growth, Profitability, Financial Stability, and Downturn Resilience indicates that the company demonstrates a very weak operational performance and financial state, as elaborated below. However, if you are looking for potential gains with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having surpassed the S&P 500 and achieved returns exceeding 91% since its inception.
In terms of the price you pay per dollar of sales or profit, TROX stock appears inexpensive relative to the larger market.
• Tronox has a price-to-sales (P/S) ratio of 0.3 compared to a value of 3.0 for the S&P 500
• Furthermore, the company's price-to-free cash flow (P/FCF) ratio stands at 2.7 as opposed to 20.5 for the S&P 500
Tronox's Revenues have experienced a decline over the past few years.
• Tronox has witnessed its top line fall at an average rate of 5.6% over the last 3 years (in contrast to an increase of 5.5% for the S&P 500)
• Its revenues have increased 4.2% from $2.9 Bil to $3.1 Bil in the last 12 months (as compared to growth of 5.5% for the S&P 500)
• Additionally, its quarterly revenues decreased 4.7% to $676 Mil in the latest quarter from $686 Mil a year prior (whereas there was a 4.8% increase for the S&P 500)
Tronox's profit margins are significantly worse than most companies within the Trefis coverage universe.
• Tronox's Operating Income over the last four quarters was $203 Mil, reflecting a poor Operating Margin of 6.7% (compared to 13.2% for the S&P 500)
• TROX Operating Cash Flow (OCF) during this timeframe was $297 Mil, indicating a poor OCF Margin of 9.8% (versus 14.9% for the S&P 500)
• Over the last four-quarter period, TROX Net Income was $-150 Mil – denoting a very poor Net Income Margin of -4.9% (compared to 11.6% for S&P 500)
Tronox's balance sheet appears very weak.
• Tronox's Debt amount was $3.1 Bil at the conclusion of the most recent quarter, while its market capitalization is $898 Mil (as of 5/30/2025). This suggests a very poor Debt-to-Equity Ratio of 384.7% (in contrast to 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is favorable]
TROX stock has performed significantly worse than the benchmark S&P 500 index during some of the recent downturns. While investors are hopeful for a soft landing for the U.S. economy, what could happen if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks fared during and after the last six market crashes.
• TROX stock plummeted 61.2% from a peak of $26.24 on 25 October 2021 to $10.19 on 27 October 2023, in comparison to a peak-to-trough decline of 25.4% for the S&P 500
• The stock is still not back to its pre-crisis high
• The maximum price the stock achieved since then is $20.29 on 3 June 2024, and it currently trades at around $5.70
• TROX stock dropped 66.7% from a high of $12.11 on 14 January 2020 to $4.03 on 1 April 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully returned to its pre-crisis peak by 23 November 2020
In conclusion, Tronox's performance across the outlined parameters above is summarized as follows:
• Growth: Weak
• Profitability: Very Weak
• Financial Stability: Extremely Weak
• Downturn Resilience: Extremely Weak
• Overall: Very Weak
Thus, despite its very low valuation, we believe that the stock is unattractive, which substantiates our assertion that TROX is a poor stock to buy.
While it is advisable to steer clear of TROX stock for the time being, you may want to consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to deliver robust returns for investors. What accounts for that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks has offered an effective strategy to capitalize on favorable market conditions while mitigating losses during market downturns, as detailed in RV Portfolio performance metrics.
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