In This Article:
- By GF Value
The stock of Match Group (NAS:MTCH, 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 $137.93 per share and the market cap of $37.3 billion, Match Group stock shows every sign of being significantly overvalued. GF Value for Match Group is shown in the chart below.
Because Match Group is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which is estimated to grow 15.63% annually over the next three to 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. Match Group has a cash-to-debt ratio of 0.22, which is in the bottom 10% of the companies in Interactive Media industry. The overall financial strength of Match Group is 4 out of 10, which indicates that the financial strength of Match Group is poor. This is the debt and cash of Match Group 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. Match Group has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $2.5 billion and earnings of $1.658 a share. Its operating margin is 31.72%, which ranks better than 89% of the companies in Interactive Media industry. Overall, the profitability of Match Group is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Match Group over the past years: