The stock of Cimpress PLC (NAS:CMPR, 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 $111.35 per share and the market cap of $2.9 billion, Cimpress PLC stock is estimated to be fairly valued. GF Value for Cimpress PLC is shown in the chart below.
Because Cimpress PLC is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 9.4% over the past three years and is estimated to grow 1.02% annually over the next three to 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. Cimpress PLC has a cash-to-debt ratio of 0.03, which is in the bottom 10% of the companies in the industry of Media - Diversified. The overall financial strength of Cimpress PLC is 3 out of 10, which indicates that the financial strength of Cimpress PLC is poor. This is the debt and cash of Cimpress PLC 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. Cimpress PLC has been profitable 9 years over the past 10 years. During the past 12 months, the company had revenues of $2.4 billion and loss of $2.16 a share. Its operating margin of 5.10% in the middle range of the companies in the industry of Media - Diversified. Overall, GuruFocus ranks Cimpress PLC’s profitability as strong. This is the revenue and net income of Cimpress PLC 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 Cimpress PLC is 9.4%, which ranks better than 80% of the companies in the industry of Media - Diversified. The 3-year average EBITDA growth is 31.2%, which ranks better than 82% of the companies in the industry of Media - Diversified.
Another way to look at the profitability of a company is to compare its return on invested capital and the weighted 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. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, Cimpress PLC’s return on invested capital is 13.79, and its cost of capital is 32.47. The historical ROIC vs WACC comparison of Cimpress PLC is shown below:
To conclude, Cimpress PLC (NAS:CMPR, 30-year Financials) stock is estimated to be fairly valued. The company's financial condition is poor and its profitability is strong. Its growth ranks better than 82% of the companies in the industry of Media - Diversified. To learn more about Cimpress PLC stock, you can check out its 30-year Financials here.
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