- By GF Value
The stock of Miller Industries (NYSE:MLR, 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 $46 per share and the market cap of $524.9 million, Miller Industries stock is estimated to be significantly overvalued. GF Value for Miller Industries is shown in the chart below.
Because Miller Industries is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 1.9% over the past 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. Miller Industries has a cash-to-debt ratio of 38.20, which which ranks better than 90% of the companies in Vehicles & Parts industry. The overall financial strength of Miller Industries is 8 out of 10, which indicates that the financial strength of Miller Industries is strong. This is the debt and cash of Miller Industries 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. Miller Industries has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $651.3 million and earnings of $2.61 a share. Its operating margin of 5.93% better than 67% of the companies in Vehicles & Parts industry. Overall, GuruFocus ranks Miller Industries's profitability as fair. This is the revenue and net income of Miller Industries over the past years: