In This Article:
- By GF Value
The stock of SRAX (NAS:SRAX, 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 $6.82 per share and the market cap of $158.1 million, SRAX stock appears to be significantly overvalued. GF Value for SRAX is shown in the chart below.
Because SRAX is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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. SRAX has a cash-to-debt ratio of 6.92, which is better than 73% of the companies in the industry of Media - Diversified. The overall financial strength of SRAX is 5 out of 10, which indicates that the financial strength of SRAX is fair. This is the debt and cash of SRAX 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. SRAX has been profitable 2 years over the past 10 years. During the past 12 months, the company had revenues of $13.7 million and loss of $1.388 a share. Its operating margin of -66.60% worse than 89% of the companies in the industry of Media - Diversified. Overall, GuruFocus ranks SRAX's profitability as poor. This is the revenue and net income of SRAX 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 SRAX is -40.7%, which ranks in the bottom 10% of the companies in the industry of Media - Diversified. The 3-year average EBITDA growth rate is 56.4%, which ranks better than 90% of the companies in the industry of Media - Diversified.