Orbsat Stock Appears To Be Significantly Overvalued
In This Article:
- By GF Value
The stock of Orbsat (OTCPK:OSAT, 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 $2.975 per share and the market cap of $18.4 million, Orbsat stock gives every indication of being significantly overvalued. GF Value for Orbsat is shown in the chart below.
Because Orbsat 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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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. Orbsat has a cash-to-debt ratio of 0.98, which is in the middle range of the companies in Hardware industry. GuruFocus ranks the overall financial strength of Orbsat at 4 out of 10, which indicates that the financial strength of Orbsat is poor. This is the debt and cash of Orbsat 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. Orbsat has been profitable 2 years over the past 10 years. During the past 12 months, the company had revenues of $5.7 million and loss of $4.094 a share. Its operating margin of -35.74% in the bottom 10% of the companies in Hardware industry. Overall, GuruFocus ranks Orbsat's profitability as poor. This is the revenue and net income of Orbsat over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Orbsat is -71.7%, which ranks in the bottom 10% of the companies in Hardware industry. The 3-year average EBITDA growth rate is 79%, which ranks better than 97% of the companies in Hardware industry.