- By GF Value
The stock of OptimizeRx (NAS:OPRX, 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 $50.31 per share and the market cap of $845.5 million, OptimizeRx stock gives every indication of being significantly overvalued. GF Value for OptimizeRx is shown in the chart below.
Because OptimizeRx is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 33.2% over the past three years and is estimated to grow 44.59% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. OptimizeRx has a cash-to-debt ratio of 23.42, which is better than 85% of the companies in the industry of Healthcare Providers & Services. The overall financial strength of OptimizeRx is 7 out of 10, which indicates that the financial strength of OptimizeRx is fair. This is the debt and cash of OptimizeRx over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. OptimizeRx has been profitable 1 over the past 10 years. Over the past twelve months, the company had a revenue of $43.3 million and loss of $0.16 a share. Its operating margin is -4.93%, which ranks worse than 71% of the companies in the industry of Healthcare Providers & Services. Overall, the profitability of OptimizeRx is ranked 3 out of 10, which indicates poor profitability. This is the revenue and net income of OptimizeRx over the past years: