In This Article:
- By GF Value
The stock of Turtle Beach (NAS:HEAR, 30-year Financials) gives every indication 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 $26.14 per share and the market cap of $404.6 million, Turtle Beach stock shows every sign of being significantly overvalued. GF Value for Turtle Beach is shown in the chart below.
Because Turtle Beach is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 22.1% over the past three years and is estimated to grow 19.50% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
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. Turtle Beach has a cash-to-debt ratio of 10000.00, which which ranks better than 100% of the companies in Hardware industry. The overall financial strength of Turtle Beach is 8 out of 10, which indicates that the financial strength of Turtle Beach is strong. This is the debt and cash of Turtle Beach 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. Turtle Beach has been profitable 3 years over the past 10 years. During the past 12 months, the company had revenues of $360.1 million and earnings of $2.23 a share. Its operating margin of 13.65% better than 84% of the companies in Hardware industry. Overall, GuruFocus ranks Turtle Beach's profitability as poor. This is the revenue and net income of Turtle Beach over the past years: