- By GF Value
The stock of Cormedix (NAS:CRMD, 30-year Financials) is estimated to be possible value trap, 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 $8.99 per share and the market cap of $288.9 million, Cormedix stock gives every indication of being possible value trap. GF Value for Cormedix is shown in the chart below.
The reason we think that Cormedix stock might be a value trap is because
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. Cormedix has a cash-to-debt ratio of 35.28, which is in the middle range of the companies in Biotechnology industry. The overall financial strength of Cormedix is 6 out of 10, which indicates that the financial strength of Cormedix is fair. This is the debt and cash of Cormedix over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Cormedix has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $0.2 million and loss of $0.78 a share. Its operating margin is -12746.63%, which ranks in the bottom 10% of the companies in Biotechnology industry. Overall, the profitability of Cormedix is ranked 1 out of 10, which indicates poor profitability. This is the revenue and net income of Cormedix 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 Cormedix is -26.3%, which ranks worse than 72% of the companies in Biotechnology industry. The 3-year average EBITDA growth is 35.9%, which ranks better than 81% of the companies in Biotechnology industry.