In This Article:
- By GF Value
The stock of Qualys (NAS:QLYS, 30-year Financials) is believed to be fairly valued, 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 $103.79 per share and the market cap of $4.1 billion, Qualys stock appears to be fairly valued. GF Value for Qualys is shown in the chart below.
Because Qualys is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 15.6% over the past three years and is estimated to grow 9.83% annually over the next three to five years.
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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. Qualys has a cash-to-debt ratio of 6.21, which ranks in the middle range of the companies in Software industry. Based on this, GuruFocus ranks Qualys's financial strength as 8 out of 10, suggesting strong balance sheet. This is the debt and cash of Qualys 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. Qualys has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $363 million and earnings of $2.25 a share. Its operating margin is 26.63%, which ranks better than 93% of the companies in Software industry. Overall, the profitability of Qualys is ranked 8 out of 10, which indicates strong profitability. This is the revenue and net income of Qualys 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 performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Qualys is 15.6%, which ranks better than 72% of the companies in Software industry. The 3-year average EBITDA growth rate is 30.2%, which ranks better than 76% of the companies in Software industry.