- By GF Value
The stock of GW Pharmaceuticals PLC (NAS:GWPH, 30-year Financials) is estimated to be significantly undervalued, 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 $218.96 per share and the market cap of $6.8 billion, GW Pharmaceuticals PLC stock is estimated to be significantly undervalued. GF Value for GW Pharmaceuticals PLC is shown in the chart below.
Because GW Pharmaceuticals PLC is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth, which averaged 268.8% over the past five years.
Link: These companies may deliever higher future returns at reduced risk.
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. GW Pharmaceuticals PLC has a cash-to-debt ratio of 10.78, which which ranks better than 77% of the companies in Drug Manufacturers industry. The overall financial strength of GW Pharmaceuticals PLC is 7 out of 10, which indicates that the financial strength of GW Pharmaceuticals PLC is fair. This is the debt and cash of GW Pharmaceuticals PLC 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. GW Pharmaceuticals PLC has been profitable 2 over the past 10 years. Over the past twelve months, the company had a revenue of $559 million and loss of $2.16 a share. Its operating margin is -11.73%, which ranks worse than 68% of the companies in Drug Manufacturers industry. Overall, the profitability of GW Pharmaceuticals PLC is ranked 3 out of 10, which indicates poor profitability. This is the revenue and net income of GW Pharmaceuticals PLC over the past years: