- By GF Value
The stock of Noble Midstream Partners LP (NAS:NBLX, 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 $15.17 per share and the market cap of $1.4 billion, Noble Midstream Partners LP stock shows every sign of being significantly overvalued. GF Value for Noble Midstream Partners LP is shown in the chart below.
Because Noble Midstream Partners LP 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.
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. Noble Midstream Partners LP has a cash-to-debt ratio of 0.01, which which ranks in the bottom 10% of the companies in Oil & Gas industry. The overall financial strength of Noble Midstream Partners LP is 3 out of 10, which indicates that the financial strength of Noble Midstream Partners LP is poor. This is the debt and cash of Noble Midstream Partners LP 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. Noble Midstream Partners LP has been profitable 6 years over the past 10 years. During the past 12 months, the company had revenues of $764.6 million and earnings of $1.49 a share. Its operating margin of 34.85% better than 91% of the companies in Oil & Gas industry. Overall, GuruFocus ranks Noble Midstream Partners LP's profitability as fair. This is the revenue and net income of Noble Midstream Partners LP over the past years: