- By GF Value
The stock of Hunter Douglas NV (OTCPK:HDUGF, 30-year Financials) gives every indication of being 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 $85.5 per share and the market cap of $2.8 billion, Hunter Douglas NV stock shows every sign of being modestly overvalued. GF Value for Hunter Douglas NV is shown in the chart below.
Because Hunter Douglas NV is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 2% over the past 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. Hunter Douglas NV has a cash-to-debt ratio of 0.13, which is worse than 86% of the companies in the industry of Furnishings, Fixtures & Appliances. The overall financial strength of Hunter Douglas NV is 6 out of 10, which indicates that the financial strength of Hunter Douglas NV is fair. This is the debt and cash of Hunter Douglas NV 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. Hunter Douglas NV has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $3.8 billion and earnings of $5.35 a share. Its operating margin of 10.57% better than 71% of the companies in the industry of Furnishings, Fixtures & Appliances. Overall, GuruFocus ranks Hunter Douglas NV's profitability as fair. This is the revenue and net income of Hunter Douglas NV over the past years: