Yahoo Finance Atrion Stock Is Estimated To Be Fairly Valued
- By GF Value
The stock of Atrion (NAS:ATRI, 30-year Financials) gives every indication of being fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $600.39 per share and the market cap of $1.1 billion, Atrion stock is estimated to be fairly valued. GF Value for Atrion is shown in the chart below.
Because Atrion is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 0.5% over the past five years.
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It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Atrion has a cash-to-debt ratio of 10000.00, which is better than 100% of the companies in the industry of Medical Devices & Instruments. The overall financial strength of Atrion is 9 out of 10, which indicates that the financial strength of Atrion is strong. This is the debt and cash of Atrion over the past years:
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Atrion has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $143.2 million and earnings of $16.87 a share. Its operating margin of 22.97% better than 84% of the companies in the industry of Medical Devices & Instruments. Overall, GuruFocus ranks Atrion's profitability as fair. This is the revenue and net income of Atrion over the past years:
One of the most important factors in the valuation of a company is growth. Long-term stock performance is closely correlated with growth according to GuruFocus research. Companies that grow faster create more value for shareholders, especially if that growth is profitable. The average annual revenue growth of Atrion is 0.5%, which ranks in the middle range of the companies in the industry of Medical Devices & Instruments. The 3-year average EBITDA growth is -1.5%, which ranks worse than 71% of the companies in the industry of Medical Devices & Instruments.
Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Atrion's return on invested capital is 13.53, and its cost of capital is 2.41. The historical ROIC vs WACC comparison of Atrion is shown below:
In short, The stock of Atrion (NAS:ATRI, 30-year Financials) is estimated to be fairly valued. The company's financial condition is strong and its profitability is fair. Its growth ranks worse than 71% of the companies in the industry of Medical Devices & Instruments. To learn more about Atrion stock, you can check out its 30-year Financials here.
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This article first appeared on GuruFocus.
