CoStar Group Stock Is Estimated To Be Modestly Overvalued
In This Article:
- By GF Value
The stock of CoStar Group (NAS:CSGP, 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 $833.99 per share and the market cap of $32.9 billion, CoStar Group stock gives every indication of being modestly overvalued. GF Value for CoStar Group is shown in the chart below.
Because CoStar Group is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 14.6% over the past three years and is estimated to grow 17.16% 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. CoStar Group has a cash-to-debt ratio of 3.29, which is better than 82% of the companies in Real Estate industry. The overall financial strength of CoStar Group is 7 out of 10, which indicates that the financial strength of CoStar Group is fair. This is the debt and cash of CoStar Group 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. CoStar Group has been profitable 9 years over the past 10 years. During the past 12 months, the company had revenues of $1.7 billion and earnings of $5.87 a share. Its operating margin of 18.24% in the middle range of the companies in Real Estate industry. Overall, GuruFocus ranks CoStar Group's profitability as strong. This is the revenue and net income of CoStar Group over the past years: