Gulf Resources (GURE) AI Stock Analysis

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Gulf Resources

(NASDAQ:GURE)

48Neutral

Gulf Resources is currently facing significant financial and operational challenges, such as declining revenues and cash flow issues, which weigh heavily on its overall stock score. Technical indicators offer mixed signals with limited upward momentum, while valuation metrics suggest the stock might be overvalued given its negative earnings. The latest earnings call revealed strategic investments but also highlighted major revenue declines and operational losses, which add to the uncertainty. The company's recovery depends on successfully capitalizing on future bromine price increases and strategic land acquisitions.

Gulf Resources (GURE) vs. S&P 500 (SPY)

Market Cap

$6.93M

Dividend YieldN/A

Average Volume (3M)716.28K

Price to Earnings (P/E)―

Beta (1Y)-0.30

Revenue Growth-74.50%

EPS Growth7.21%

CountryUS

Employees367

SectorBasic Materials

Sector Strength63

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)-0.33

Shares Outstanding11,346,618

10 Day Avg. Volume153,256

30 Day Avg. Volume716,285

Financial Highlights & Ratios

PEG Ratio>-0.01

Price to Book (P/B)0.05

Price to Sales (P/S)0.00

P/FCF Ratio-0.12

Enterprise Value/Market Cap0.84

Enterprise Value/Revenue0.10

Enterprise Value/Gross Profit-0.36

Enterprise Value/Ebitda-0.02

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Gulf Resources Business Overview & Revenue Model

Company DescriptionGulf Resources, Inc., through its subsidiaries, manufactures and trades bromine and crude salt, chemical products, and natural gas in the People's Republic of China. It provides bromine for use in bromine compounds, intermediates in organic synthesis, brominated flame retardants, fumigants, water purification compounds, dyes, medicines, and disinfectants. The company also offers crude salt for use as a material in alkali and chlorine alkali production; and for use in the chemical, food and beverage, and other industries. In addition, it manufactures and sells chemical products for use in oil and gas field exploration, oil and gas distribution, oil field drilling, papermaking chemical agents, and inorganic chemicals, as well as materials that are used for human and animal antibiotics. The company is based in Shouguang, the People's Republic of China.

How the Company Makes MoneyGulf Resources generates revenue through the extraction and sale of bromine, which is a critical component used in flame retardants, drilling fluids, and other industrial chemicals. The company also produces and sells crude salt, often used in industrial and chemical processes. Additionally, they manufacture specialty chemical products that cater to specific market needs. Their revenue streams are bolstered by their strategic location in Shandong Province, which is rich in natural resources, allowing for efficient production and distribution. Partnerships with local and international companies further enhance their market reach and revenue potential.

Gulf Resources Financial Statement Overview

Summary

Gulf Resources is facing significant financial challenges with declining revenues and margins, impacting overall profitability. While the company maintains a manageable debt level, its cash flow situation is concerning, with large cash outflows in recent years. Overall, the company must address its revenue and profitability issues to improve its financial health.

Income Statement

Negative

Gulf Resources has experienced declining revenue from $66 million in 2022 to $7.6 million in 2024, indicating a severe downturn. Gross profit margin has been negative for the past two years, with the latest at -208.4%, reflecting significant cost challenges. The net profit margin has also been negative, reaching -769.1% in 2024, showing substantial losses. These metrics point to operational and profitability issues.

Balance Sheet

Neutral

The company maintains a relatively low debt-to-equity ratio of 0.06 in 2024, suggesting prudent debt management. However, the equity ratio decreased from 92.3% in 2022 to 84.8% in 2024, indicating some weakening in financial stability. Despite these challenges, the company has maintained a positive equity position, but declining equity could be a concern.

Cash Flow

Negative

The free cash flow has deteriorated from a positive $13.6 million in 2022 to a negative $59.9 million in 2024, indicating significant cash outflows. The operating cash flow to net income ratio is negative, reflecting cash flow challenges. These factors suggest struggles in maintaining liquidity and cash management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
7.66M	30.04M	66.09M	55.03M	28.21M
	Gross Profit
-15.97M	-7.59M	37.43M	27.90M	8.79M
	EBIT
-21.28M	-11.89M	28.77M	16.23M	-1.22M
	EBITDA
-49.19M	-46.71M	29.04M	17.74M	1.08M
	Net Income Common Stockholders
-58.94M	-61.80M	10.06M	-924.72K	-8.42M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
10.08M	72.22M	108.23M	95.77M	94.22M
	Total Assets
169.46M	226.67M	292.43M	309.86M	294.04M
	Total Debt
8.73M	9.48M	9.68M	10.06M	10.61M
	Net Debt
-1.35M	-62.74M	-98.54M	-85.71M	-83.62M
	Total Liabilities
25.75M	21.42M	20.81M	23.22M	17.01M
	Stockholders Equity
143.71M	205.25M	271.62M	286.64M	277.02M
Cash Flow		Free Cash Flow
-59.85M	-32.75M	13.59M	-6.78M	-12.41M
	Operating Cash Flow
675.07K	-32.75M	51.15M	23.31M	9.31M
	Investing Cash Flow
-60.55M	0.00	-37.56M	-30.09M	-21.72M
	Financing Cash Flow
-249.24K	-267.81K	-264.86K	-290.60K	-264.98K

Gulf Resources Technical Analysis

Technical Analysis Sentiment

Negative

Last Price0.63

Price Trends

50DMA

0.70

Negative

100DMA

0.69

Negative

200DMA

0.78

Negative

Market Momentum

MACD

-0.03

Positive

RSI

44.14

Neutral

STOCH

57.52

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GURE, the sentiment is Negative. The current price of 0.63 is below the 20-day moving average (MA) of 0.70, below the 50-day MA of 0.70, and below the 200-day MA of 0.78, indicating a bearish trend. The MACD of -0.03 indicates Positive momentum. The RSI at 44.14 is Neutral, neither overbought nor oversold. The STOCH value of 57.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GURE.

Gulf Resources Risk Analysis

Gulf Resources disclosed 15 risk factors in its most recent earnings report. Gulf Resources reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Gulf Resources Peers Comparison

Overall Rating

UnderperformOutperform

Sector (49)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FSI	64 Neutral	$45.28M	14.76	8.30%	―	-0.23%	9.23%
SNES	55 Neutral	$4.81M	―	-160.41%	―	40.15%	94.78%
Sector *	49 Neutral	$1.96B	-1.15	-21.28%	3.71%	1.17%	-30.86%
GURE	48 Neutral	$6.93M	―	-33.78%	―	-74.50%	7.21%
LOOP	38 Underperform	$47.62M	―	-449.80%	―	5.45%	-155.56%
ALTO	37 Underperform	$66.85M	―	-24.43%	―	-17.27%	-112.62%

* Basic Materials Sector Average

Performance Comparison

GURE

Gulf Resources

0.63

-0.87

-58.00%

FSI

Flexible Solutions International

4.45

2.33

109.91%

ALTO

Alto Ingredients

0.86

-0.84

-49.41%

SNES

SenesTech

2.71

-4.19

-60.72%

LOOP

Loop Industries

1.00

-1.85

-64.91%

CNEY

CN Energy Group

0.19

-0.49

-72.06%

Gulf Resources Earnings Call Summary

Earnings Call Date:Nov 19, 2024

(Q3-2024)

% Change Since: 0.00%|

Next Earnings Date:May 19, 2025

Earnings Call Sentiment Negative

The earnings call highlighted strategic investments and potential future gains, particularly in bromine pricing. However, these are overshadowed by significant revenue declines, operational losses, and cash depletion. The company faces challenges in revitalizing its chemical and natural gas segments, delaying potential profitability.

Q3-2024 Updates

Positive Updates

Bromine Price Recovery

Since the end of the third quarter, bromine prices have increased substantially, indicating potential for increased future revenue.

Strategic Land Acquisition

The company acquired additional land for crude salt and bromine production, expected to yield returns in 4 to 5 years.

Flood Prevention Project Completed

Completed a $50 million flood prevention project, which is expected to help open bromine factories #2 and #10.

Negative Updates

Revenue Decline

Quarterly revenues declined by 21.8% to $2.2 million, with a net loss of $3.5 million.

Bromine Revenue and Production Decline

Bromine revenue fell 68%, with production utilization dropping from 34% to 8%.

High Operational Losses

Bromine segment incurred a $4 million loss, and overall segment losses were significant, including $13.5 million for bromine and $990,000 for chemicals.

Cash Position Decreased

Cash declined from $72.2 million to $11 million by the end of Q3 2024.

Delayed Chemical Factory Project

Postponed completion of the chemical factory due to uncertain market conditions, despite $45 million invested.

Inactive Natural Gas Business

Continued inactivity in the natural gas segment, with no clear timeline for progress.

Company Guidance

During the Gulf Resources Third Quarter 2024 Earnings Call, several key metrics and issues were discussed. The company reported a decline in revenues to approximately $2.2 million, a 21.8% drop compared to the same period last year, with a net loss of $3.5 million or $0.33 per share. The bromine segment saw a revenue decrease of 68% to $1.6 million, while crude salt revenue declined by 26% to $654,000. For the nine months ending September 30, 2024, revenues were down 74.4% to $5.9 million compared to 2023, with a net loss of $40.6 million or $3.78 per share. The company highlighted significant investments, including $60.5 million in new equipment and $50 million in a flood prevention project, impacting their cash position, which decreased to $11 million from $72.2 million at the end of 2023. Despite these challenges, the management expressed optimism about future bromine price increases and potential returns from recent strategic land acquisitions for crude salt and bromine production.

Gulf Resources Corporate Events

M&A TransactionsBusiness Operations and Strategy

Gulf Resources Enhances Operations with Salt Land Acquisition

Positive

Jan 6, 2025

Gulf Resources, through its subsidiary Shouguang Hengde Salt Industry Co. Ltd, has successfully acquired and accepted salt land from various cooperatives and farms in Shouguang City. This acquisition confirms that the land is in the anticipated usable condition, which may enhance the company’s operations and industry positioning.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.