In This Article:
- By GF Value
The stock of FinVolution Group (NYSE:FINV, 30-year Financials) is believed 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 $6.84 per share and the market cap of $1.9 billion, FinVolution Group stock is estimated to be modestly overvalued. GF Value for FinVolution Group is shown in the chart below.
Because FinVolution Group is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which is estimated to grow 35.09% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Thus, it is important to carefully review the financial strength of a company before deciding whether to buy its stock. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a company. FinVolution Group has a cash-to-debt ratio of 106.32, which is better than 83% of the companies in Credit Services industry. GuruFocus ranks the overall financial strength of FinVolution Group at 7 out of 10, which indicates that the financial strength of FinVolution Group is fair. This is the debt and cash of FinVolution Group over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. FinVolution Group has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of $940.9 million and earnings of $0.967 a share. Its operating margin is 18.68%, which ranks in the middle range of the companies in Credit Services industry. Overall, the profitability of FinVolution Group is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of FinVolution Group over the past years: