DRDGOLD LTD-SPONSORED ADR (NYSE:DRD): A CAN SLIM Analysis

The CAN SLIM investment methodology, created by William O'Neil, uses both fundamental and technical analysis to find high-growth market leaders. This structured process assesses companies using seven criteria represented by the acronym CAN SLIM, concentrating on earnings increases, yearly growth patterns, new products or services, supply and demand factors, leading companies in their field, investment from large funds, and the general market trend. The method looks for stocks with solid fundamental traits that also display technical health via price movement and accumulation by institutions.

Earnings and Sales Momentum

DRDGOLD LTD-SPONSORED ADR (NYSE:DRD) shows very strong quarterly growth that fits well with the "C" criterion in CAN SLIM, which highlights current quarterly earnings and sales increases. The company's latest financial numbers show:

• Quarterly EPS growth of 203.09% compared to the same quarter last year
• Quarterly revenue growth of 141.26% year-over-year
• Both numbers are well above the CAN SLIM minimum of 20-25% growth

This powerful growth in earnings and sales points to good operational results and market need for the company's gold retreatment services. The major increase in quarterly results indicates positive movement that CAN SLIM investors usually look for when finding possible investment chances.

Annual Growth and Profitability

The "A" part of CAN SLIM centers on yearly earnings growth, and DRDGOLD performs very well here. The company's three-year EPS compound annual growth rate is 25.64%, meeting the method's need for maintained growth between 25-50%. Significantly, DRDGOLD shows very good profitability numbers:

• Return on Equity of 36.17%, much higher than the 10% minimum
• This puts the company in the best group of its industry for profitability
• Good margins across gross, operating, and profit areas

These numbers show not only growth but good quality growth, a main difference in the CAN SLIM method. The high ROE shows efficient use of shareholder money, while steady profitability over several years gives trust in the company's business model.

Market Leadership and Institutional Support

DRDGOLD displays strong traits in the "L" (leading company) and "I" (investment from large funds) parts of the method. The company's relative strength rating of 95.24 shows it has done better than 95% of all stocks in the market, a clear sign of being a market leader. At the same time, ownership by institutions is 15.60%, much lower than the 85% level that could show limited room for more buying from these investors.

The mix of strong relative strength with reasonable institutional ownership indicates the stock has gained notice from bigger investors while still having potential for more institutional purchases. This balance often creates good supply and demand conditions that can lead to further price increases.

Financial Health and Valuation

From a fundamental viewpoint, DRDGOLD makes a strong case with good financial health and fair valuation. The company's fundamental analysis report shows an overall rating of 7/10, with special strength in profitability (9/10). Important financial points include:

• Very little debt with a debt-to-equity ratio of 0.001
• Good cash position with current ratio of 2.28
• Appealing valuation with P/E ratio of 11.17, under industry and S&P 500 averages

The company's almost no-debt balance sheet gives financial room and lowers risk, while the fair valuation numbers suggest the stock may not be fully priced for its growth potential.

Technical Perspective and Market Context

The technical analysis shows a mixed situation that needs thought. While the stock has strong longer-term results with 101% gains over the past year, recent price movement has shown some softness. The technical rating of 7/10 shows this difference between strong past performance and current tests:

• Long-term trend is still positive even with recent sideways movement
• Stock is trading in the middle of its 52-week range
• Setup quality rating of 3/10 indicates the present time may not be best for new entries

This technical picture shows the need for good timing in the CAN SLIM method. While the fundamental criteria are met well, investors might watch for better technical setup before starting positions.

Investment Considerations

For CAN SLIM investors, DRDGOLD presents a notable case of good fundamental traits combined with some technical questions. The company does very well in the main growth numbers the method focuses on, with outstanding quarterly growth, steady yearly increases, and very good profitability. The stock's status as a market leader, fair institutional investment, and sound financial health add to the investment case.

However, the recent technical softness and lack of a high-quality setup suggest waiting could be wise. CAN SLIM users typically search for agreement between good fundamentals and positive technical patterns, especially breakouts from correct bases with strong volume.

For investors wanting to look at other companies that fit CAN SLIM criteria, more screening results can be found using our pre-configured CAN SLIM screener.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions. Past performance is not indicative of future results.