- By GF Value
The stock of Alpha Pro Tech (AMEX:APT, 30-year Financials) appears to be 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 $8.68 per share and the market cap of $117.2 million, Alpha Pro Tech stock shows every sign of being fairly valued. GF Value for Alpha Pro Tech is shown in the chart below.
Because Alpha Pro Tech is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 35.8% over the past three years and is estimated to grow 20.80% 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. Alpha Pro Tech has a cash-to-debt ratio of 6.50, which is better than 82% of the companies in Construction industry. The overall financial strength of Alpha Pro Tech is 7 out of 10, which indicates that the financial strength of Alpha Pro Tech is fair. This is the debt and cash of Alpha Pro Tech 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. Alpha Pro Tech has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $102.7 million and earnings of $1.96 a share. Its operating margin of 30.75% better than 96% of the companies in Construction industry. Overall, GuruFocus ranks Alpha Pro Tech's profitability as strong. This is the revenue and net income of Alpha Pro Tech over the past years: