In This Article:
- By GF Value
The stock of MasTec (NYSE:MTZ, 30-year Financials) is believed 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 $90.13 per share and the market cap of $6.7 billion, MasTec stock appears to be significantly overvalued. GF Value for MasTec is shown in the chart below.
Because MasTec is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 2.2% over the past three years and is estimated to grow 5.60% annually over the next three to 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. MasTec has a cash-to-debt ratio of 0.28, which which ranks worse than 71% of the companies in Construction industry. The overall financial strength of MasTec is 6 out of 10, which indicates that the financial strength of MasTec is fair. This is the debt and cash of MasTec 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. MasTec has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $6.3 billion and earnings of $4.39 a share. Its operating margin is 6.85%, which ranks in the middle range of the companies in Construction industry. Overall, the profitability of MasTec is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of MasTec over the past years: