NEXA

We rate Nexa Resources S.A. (NEXA) as a Hold with a composite score of 52.6/100 at a current price of $11.97. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in momentum (82th percentile) and stability (65th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (27th percentile) and investment (47th percentile) tempers our overall conviction. We assign a No Moat rating (13/100), High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Nexa Resources S.A. holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 52.6/100 places it at rank #1594 in our full 7,333-stock universe. At $1.2B in market capitalization, Nexa Resources S.A. is a small-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Momentum indicators (82th percentile) are constructive regarding the near-term price trend. Revenue growth data is unavailable, limiting our ability to confirm whether momentum is fundamentally supported.

Margin data is not available for Nexa Resources S.A., which limits our assessment of the company's cost structure and operating efficiency. We rely on factor-based signals to infer business quality in the absence of detailed margin data.

At a current price of $11.97, Nexa Resources S.A. is trading near fair value based on current fundamentals. Our value factor score of 47/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 3.3x (discounted to peers), P/B of 1.9x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a High uncertainty rating to Nexa Resources S.A.. Key risk factors include significant leverage (221% debt-to-equity), weak quality scores (27th percentile), low beta of 0.63 — while defensive, this may indicate limited upside participation in bull markets. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (221% debt-to-equity); weak quality scores (27th percentile); low beta of 0.63 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 65th percentile and quality factor at the 27th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (65th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Nexa Resources S.A.'s capital allocation as Poor. Key concerns include low returns on equity (-92.1%), elevated leverage (221% D/E), weak asset returns (ROA -16.2%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Nexa Resources S.A. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Nexa Resources S.A. receives a Hold rating with a composite score of 52.6/100 (rank #1594 of 7,333). Our quantitative framework assigns a No Moat (13/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 54/100.

Our analysis supports a neutral stance on Nexa Resources S.A.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.