- By GF Value
The stock of Myers Industries (NYSE:MYE, 30-year Financials) shows every sign 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 $20.57 per share and the market cap of $742 million, Myers Industries stock appears to be significantly overvalued. GF Value for Myers Industries is shown in the chart below.
Because Myers Industries is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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. Myers Industries has a cash-to-debt ratio of 0.30, which is in the middle range of the companies in Packaging & Containers industry. GuruFocus ranks the overall financial strength of Myers Industries at 6 out of 10, which indicates that the financial strength of Myers Industries is fair. This is the debt and cash of Myers 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. Myers Industries has been profitable 7 years over the past 10 years. During the past 12 months, the company had revenues of $510.4 million and earnings of $1.02 a share. Its operating margin of 10.49% better than 71% of the companies in Packaging & Containers industry. Overall, GuruFocus ranks Myers Industries's profitability as fair. This is the revenue and net income of Myers Industries over the past years: