- By GF Value
The stock of Steel Partners Holdings LP (NYSE:SPLP, 30-year Financials) shows every sign of being 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 $13.99 per share and the market cap of $352.6 million, Steel Partners Holdings LP stock shows every sign of being fairly valued. GF Value for Steel Partners Holdings LP is shown in the chart below.
Because Steel Partners Holdings LP is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 12.5% over the past five years.
Link: These companies may deliever higher future returns at reduced risk.
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. Steel Partners Holdings LP has a cash-to-debt ratio of 0.06, which ranks in the bottom 10% of the companies in Conglomerates industry. Based on this, GuruFocus ranks Steel Partners Holdings LP's financial strength as 3 out of 10, suggesting poor balance sheet. This is the debt and cash of Steel Partners Holdings LP over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Steel Partners Holdings LP has been profitable 7 over the past 10 years. Over the past twelve months, the company had a revenue of $1.4 billion and loss of $3.302 a share. Its operating margin is 6.37%, which ranks in the middle range of the companies in Conglomerates industry. Overall, GuruFocus ranks the profitability of Steel Partners Holdings LP at 6 out of 10, which indicates fair profitability. This is the revenue and net income of Steel Partners Holdings LP over the past years: