SLC Agricola SA Stock Appears To Be Modestly Overvalued
- By GF Value
The stock of SLC Agricola SA (BSP:SLCE3, 30-year Financials) is estimated to be modestly overvalued, 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 BRL 51.24 per share and the market cap of BRL 9.6 billion, SLC Agricola SA stock gives every indication of being modestly overvalued. GF Value for SLC Agricola SA is shown in the chart below.
Because SLC Agricola SA is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 28.9% over the past three years and is estimated to grow 18.04% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
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. SLC Agricola SA has a cash-to-debt ratio of 0.44, which is in the middle range of the companies in the industry of Consumer Packaged Goods. The overall financial strength of SLC Agricola SA is 4 out of 10, which indicates that the financial strength of SLC Agricola SA is poor. This is the debt and cash of SLC Agricola SA over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. SLC Agricola SA has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of BRL 4.4 billion and earnings of BRL 3.648 a share. Its operating margin is 33.85%, which ranks better than 98% of the companies in the industry of Consumer Packaged Goods. Overall, the profitability of SLC Agricola SA is ranked 8 out of 10, which indicates strong profitability. This is the revenue and net income of SLC Agricola SA over the past years: