- By GF Value
The stock of Sportsman's Warehouse Holdings (NAS:SPWH, 30-year Financials) is estimated 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 $17.75 per share and the market cap of $776 million, Sportsman's Warehouse Holdings stock shows every sign of being significantly overvalued. GF Value for Sportsman's Warehouse Holdings is shown in the chart below.
Because Sportsman's Warehouse Holdings is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 19.7% over the past five years.
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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. Sportsman's Warehouse Holdings has a cash-to-debt ratio of 0.24, which which ranks in the middle range of the companies in Travel & Leisure industry. The overall financial strength of Sportsman's Warehouse Holdings is 6 out of 10, which indicates that the financial strength of Sportsman's Warehouse Holdings is fair. This is the debt and cash of Sportsman's Warehouse Holdings over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Sportsman's Warehouse Holdings has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $1.5 billion and earnings of $2.04 a share. Its operating margin is 8.46%, which ranks better than 77% of the companies in Travel & Leisure industry. Overall, the profitability of Sportsman's Warehouse Holdings is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Sportsman's Warehouse Holdings over the past years: