Onconova Therapeutics Stock Gives Every Indication Of Being Significantly Overvalued
- By GF Value
The stock of Onconova Therapeutics (NAS:ONTX, 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 $6.42 per share and the market cap of $101.3 million, Onconova Therapeutics stock appears to be significantly overvalued. GF Value for Onconova Therapeutics is shown in the chart below.
Because Onconova Therapeutics is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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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. Onconova Therapeutics has a cash-to-debt ratio of 10000.00, which ranks better than 100% of the companies in Biotechnology industry. Based on this, GuruFocus ranks Onconova Therapeutics's financial strength as 7 out of 10, suggesting fair balance sheet. This is the debt and cash of Onconova Therapeutics 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. Onconova Therapeutics has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $0.2 million and loss of $1.8 a share. Its operating margin is -10198.30%, which ranks in the bottom 10% of the companies in Biotechnology industry. Overall, GuruFocus ranks the profitability of Onconova Therapeutics at 1 out of 10, which indicates poor profitability. This is the revenue and net income of Onconova Therapeutics over the past years: