In This Article:
- By GF Value
The stock of The Chemours Co (NYSE:CC, 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 $31.53 per share and the market cap of $5.2 billion, The Chemours Co stock shows every sign of being significantly overvalued. GF Value for The Chemours Co is shown in the chart below.
Because The Chemours Co is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which is estimated to grow 0.63% 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. The Chemours Co has a cash-to-debt ratio of 0.26, which is worse than 76% of the companies in Chemicals industry. The overall financial strength of The Chemours Co is 3 out of 10, which indicates that the financial strength of The Chemours Co is poor. This is the debt and cash of The Chemours Co 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. The Chemours Co has been profitable 8 years over the past 10 years. During the past 12 months, the company had revenues of $5 billion and earnings of $1.33 a share. Its operating margin of 9.02% in the middle range of the companies in Chemicals industry. Overall, GuruFocus ranks The Chemours Co's profitability as fair. This is the revenue and net income of The Chemours Co over the past years: