In This Article:
- By GF Value
The stock of Ideanomics (NAS:IDEX, 30-year Financials) appears to be significantly 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 $2.86 per share and the market cap of $1.2 billion, Ideanomics stock appears to be significantly overvalued. GF Value for Ideanomics is shown in the chart below.
Because Ideanomics is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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. Ideanomics has a cash-to-debt ratio of 4.09, which which ranks in the middle range of the companies in Software industry. The overall financial strength of Ideanomics is 5 out of 10, which indicates that the financial strength of Ideanomics is fair. This is the debt and cash of Ideanomics 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. Ideanomics has been profitable 0 years over the past 10 years. During the past 12 months, the company had revenues of $59.1 million and loss of $0.391 a share. Its operating margin of -83.40% worse than 87% of the companies in Software industry. Overall, GuruFocus ranks Ideanomics's profitability as poor. This is the revenue and net income of Ideanomics over the past years:
Growth is probably one of the most important factors in the valuation of a company. GuruFocus' research has found that growth is closely correlated with the long-term performance of a company's stock. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Likewise, if a company's revenue and earnings are declining, the value of the company will decrease. Ideanomics's 3-year average revenue growth rate is in the bottom 10% of the companies in Software industry. Ideanomics's 3-year average EBITDA growth rate is -32.4%, which ranks in the bottom 10% of the companies in Software industry.