- By GF Value
The stock of InfuSystems Holdings (AMEX:INFU, 30-year Financials) gives every indication of being 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 $20.35 per share and the market cap of $413.9 million, InfuSystems Holdings stock shows every sign of being significantly overvalued. GF Value for InfuSystems Holdings is shown in the chart below.
Because InfuSystems Holdings is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 12.8% over the past 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. InfuSystems Holdings has a cash-to-debt ratio of 0.23, which is worse than 88% of the companies in the industry of Medical Devices & Instruments. GuruFocus ranks the overall financial strength of InfuSystems Holdings at 5 out of 10, which indicates that the financial strength of InfuSystems Holdings is fair. This is the debt and cash of InfuSystems Holdings over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. InfuSystems Holdings has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of $97.4 million and earnings of $0.8 a share. Its operating margin is 9.06%, which ranks in the middle range of the companies in the industry of Medical Devices & Instruments. Overall, the profitability of InfuSystems Holdings is ranked 5 out of 10, which indicates fair profitability. This is the revenue and net income of InfuSystems Holdings over the past years: