- By GF Value
The stock of Mettler-Toledo International (NYSE:MTD, 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 $1163.08 per share and the market cap of $27.1 billion, Mettler-Toledo International stock gives every indication of being significantly overvalued. GF Value for Mettler-Toledo International is shown in the chart below.
Because Mettler-Toledo International is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 7.3% over the past three years and is estimated to grow 5.22% annually over the next three to five years.
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Since investing in companies with low financial strength could result in permanent capital loss, investors must carefully review a company's financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company's financial strength. Mettler-Toledo International has a cash-to-debt ratio of 0.07, which ranks in the bottom 10% of the companies in the industry of Medical Diagnostics & Research. Based on this, GuruFocus ranks Mettler-Toledo International's financial strength as 5 out of 10, suggesting fair balance sheet. This is the debt and cash of Mettler-Toledo International over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Mettler-Toledo International has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $3.1 billion and earnings of $24.96 a share. Its operating margin is 25.41%, which ranks better than 84% of the companies in the industry of Medical Diagnostics & Research. Overall, GuruFocus ranks the profitability of Mettler-Toledo International at 9 out of 10, which indicates strong profitability. This is the revenue and net income of Mettler-Toledo International over the past years: