Luokung Technology Stock Is Estimated To Be

GuruFocus.com
·3 min read

- By GF Value

The stock of Luokung Technology (NAS:LKCO, 30-year Financials) appears to be , 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 $1.34 per share and the market cap of $425.9 million, Luokung Technology stock is believed to be . GF Value for Luokung Technology is shown in the chart below.


Luokung Technology Stock Is Estimated To Be
Luokung Technology Stock Is Estimated To Be

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Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Thus, it is important to carefully review the financial strength of a company before deciding whether to buy its stock. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a company. Luokung Technology has a cash-to-debt ratio of 0.34, which is in the bottom 10% of the companies in Interactive Media industry. GuruFocus ranks the overall financial strength of Luokung Technology at 5 out of 10, which indicates that the financial strength of Luokung Technology is fair. This is the debt and cash of Luokung Technology over the past years:

Luokung Technology Stock Is Estimated To Be
Luokung Technology Stock Is Estimated To Be

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. Luokung Technology has been profitable 2 years over the past 10 years. During the past 12 months, the company had revenues of $20.4 million and loss of $0.2 a share. Its operating margin of -185.91% in the bottom 10% of the companies in Interactive Media industry. Overall, GuruFocus ranks Luokung Technology's profitability as poor. This is the revenue and net income of Luokung Technology over the past years:

Luokung Technology Stock Is Estimated To Be
Luokung Technology Stock Is Estimated To Be

One of the most important factors in the valuation of a company is growth. Long-term stock performance is closely correlated with growth according to GuruFocus research. Companies that grow faster create more value for shareholders, especially if that growth is profitable. The average annual revenue growth of Luokung Technology is -52.1%, which ranks in the bottom 10% of the companies in Interactive Media industry. The 3-year average EBITDA growth is 49.2%, which ranks better than 80% of the companies in Interactive Media industry.

Another way to look at the profitability of a company is to compare its return on invested capital and the weighted cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, Luokung Technology's return on invested capital is -43.57, and its cost of capital is 7.44. The historical ROIC vs WACC comparison of Luokung Technology is shown below:

Luokung Technology Stock Is Estimated To Be
Luokung Technology Stock Is Estimated To Be

In closing, The stock of Luokung Technology (NAS:LKCO, 30-year Financials) appears to be . The company's financial condition is fair and its profitability is poor. Its growth ranks better than 80% of the companies in Interactive Media industry. To learn more about Luokung Technology stock, you can check out its 30-year Financials here. To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener. This article first appeared on GuruFocus.