- By GF Value
The stock of Al Abdullatif Industrial Investment Co (SAU:2340, 30-year Financials) is believed to be significantly 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 SAR 18.84 per share and the market cap of SAR 1.5 billion, Al Abdullatif Industrial Investment Co stock appears to be significantly overvalued. GF Value for Al Abdullatif Industrial Investment Co is shown in the chart below.
Because Al Abdullatif Industrial Investment Co is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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. Al Abdullatif Industrial Investment Co has a cash-to-debt ratio of 1.01, which is in the middle range of the companies in the industry of Manufacturing - Apparel & Accessories. The overall financial strength of Al Abdullatif Industrial Investment Co is 5 out of 10, which indicates that the financial strength of Al Abdullatif Industrial Investment Co is fair. This is the debt and cash of Al Abdullatif Industrial Investment Co over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Al Abdullatif Industrial Investment Co has been profitable 8 over the past 10 years. Over the past twelve months, the company had a revenue of SAR 466.1 million and loss of SAR 0.12 a share. Its operating margin is -6.40%, which ranks worse than 75% of the companies in the industry of Manufacturing - Apparel & Accessories. Overall, GuruFocus ranks the profitability of Al Abdullatif Industrial Investment Co at 5 out of 10, which indicates fair profitability. This is the revenue and net income of Al Abdullatif Industrial Investment Co over the past years: