InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued

GuruFocus.com
·4 min read

- By GF Value

The stock of InfuSystems Holdings (AMEX:INFU, 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 $20.35 per share and the market cap of $413.9 million, InfuSystems Holdings stock shows every sign of being significantly overvalued. GF Value for InfuSystems Holdings is shown in the chart below.


InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued
InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued

Because InfuSystems Holdings is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 12.8% over the past five years.

Link: These companies may deliever higher future returns at reduced risk.

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. InfuSystems Holdings has a cash-to-debt ratio of 0.23, which is worse than 88% of the companies in the industry of Medical Devices & Instruments. GuruFocus ranks the overall financial strength of InfuSystems Holdings at 5 out of 10, which indicates that the financial strength of InfuSystems Holdings is fair. This is the debt and cash of InfuSystems Holdings over the past years:

InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued
InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued

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. InfuSystems Holdings has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of $97.4 million and earnings of $0.8 a share. Its operating margin is 9.06%, which ranks in the middle range of the companies in the industry of Medical Devices & Instruments. Overall, the profitability of InfuSystems Holdings is ranked 5 out of 10, which indicates fair profitability. This is the revenue and net income of InfuSystems Holdings over the past years:

InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued
InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued

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 stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of InfuSystems Holdings is 12.8%, which ranks better than 70% of the companies in the industry of Medical Devices & Instruments. The 3-year average EBITDA growth rate is 40.6%, which ranks better than 84% of the companies in the industry of Medical Devices & Instruments.

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, InfuSystems Holdings's return on invested capital is 26.85, and its cost of capital is 7.12. The historical ROIC vs WACC comparison of InfuSystems Holdings is shown below:

InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued
InfuSystems Holdings Stock Is Estimated To Be Significantly Overvalued

To conclude, the stock of InfuSystems Holdings (AMEX:INFU, 30-year Financials)is estimated to be significantly overvalued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 84% of the companies in the industry of Medical Devices & Instruments. To learn more about InfuSystems Holdings 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.

Recommended Stories

  • Asian American war vet takes shirt off to show scars in powerful town hall speech against racism

    Official said voters told him he “did not look American enough” while he was campaigning

  • 'I'll show you what patriotism looks like': Ohio official bares chest, reveals scars to decry anti-Asian racism

    A township trustee in a Cincinnati suburb stunned those gathered for the regular meeting by unbuttoning his shirt – to send a message about racism.

  • Finally There’s Good News for the Giant Boat Wedged in the Suez Canal

    Satellogic/Handout via ReutersThe cargo ship that has blocked the Suez Canal since Tuesday—and epitomized the mood of a battered and exhausted public—could be freed on Saturday night, some optimistic reports suggest.But, as the ship’s calamitous journey has so far indicated, there is plenty that could still go wrong.Yukito Higaki, president of the Japanese company that owns the Ever Given, said he hoped that a weekend high tide and the dislodging efforts already underway would help to refloat the ship, NBC reported. He also apologized for the multi-billion dollar mess. “We apologize for blocking the traffic and causing the tremendous trouble and worry to many people, including the involved parties,” Higaki said.Releasing Container Ship From Suez Canal Could Capsize ItThe blockade on one of the busiest shipping routes in the world has stalled hundreds of vessels and triggered an unfurling trade crisis. The jam has held up nearly $10 billion in trade each day, according to The New York Times, and added another layer of stress onto an industry already kneecapped by pandemic-induced lockdowns.Bloomberg reports that Ikea is among the slew of companies facing supply-chain issues, which is stressful news to anyone in the market for a cheap bookshelf. The Swedish company is reportedly “considering all options to ensure availability of products.” Construction equipment company Caterpillar “is said to be considering airlifting products if necessary.”In some positive news, the 1,312-foot long Ever Given ship had moved slightly as of Saturday morning, Reuters reports. The ship’s rudder finally began to operate on Friday night, and by the afternoon the stern had moved as well.One Suez Canal pilot told CNN that he believed the ship could be removed by Saturday night. “The locomotives are now full force and the ship is starting to operate its machines,” Hend Fathy Hussein, a spokeswoman for the Suez Canal Economic Zone, wrote on Facebook. “[B]ut it hasn’t been floating yet.”Osama Rabie, chairman of the Suez Canal Authority, said in a press conference on Saturday that he “could not say” when the ship might be free. Unusually strong winds continue to hinder attempts to move it. Hundreds of ships wait in the Red Sea as the Ever Given remains lodged in the Suez Canal. Mahmoud Khaled/AFP via Getty The BBC reported that 14 tugboats are aiding in Saturday’s refloating efforts. High winds were initially blamed for the grounding, but Rabie said on Saturday that human error may have played a part, too.“The weather was one reason, but maybe there was a technical error, or a human error,” he said.Workers are currently digging out the stuck ship and using tugboats to dislodge it. A worst case scenario, Rabie said, would be removing some of the cargo to lighten the load.The Ever Given has a capacity for 20,000 containers; according to the BBC removing that weight could take “weeks” and require “specialist equipment.” If the ship is not freed on Saturday, the Times reported that its “best chance” might come on Monday, when a high tide is predicted that could helpfully push up water levels.The canal provides a thoroughfare for around 15 percent of global shipping traffic.Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

  • Seth Rogen confirms Emma Watson walked off 'This Is the End' set after refusing to shoot Channing Tatum gimp scene

    The scene in question was one of the movie's most graphic, starring Danny McBride as a cannibal who has Tatum on a leash as his gimp.

  • Demi Lovato says getting engaged to Max Ehrich was an attempt to 'prove to the world' she was OK

    In a new interview with Entertainment Weekly, the singer spoke about her previous relationship with the actor, who she was engaged to for two months.

  • Dr. Deborah Birx says every American COVID-19 death after the first 100,000 could've been mitigated, but a Democratic lawmaker says she's to blame for 'enabling' Trump

    Birx said thousands of Americans died preventable deaths, but Rep. Ted Lieu and others accused her of being partly responsible.

  • 90,000 oily pennies dumped in Georgia man's driveway as final pay check from former employer

    Andreas Flaten received his final paycheck from A OK Walker Autoworks in Peachtree City, Georgia, with a payslip that came with an explicit message.

  • Police: 2 dead, 3 arrested in Virginia Beach shootings

    Overnight shootings near the Atlantic oceanfront in Virginia Beach left two people dead and eight wounded in a scene described by authorities on Saturday as “very chaotic.” A woman who died was likely an innocent bystander, authorities said, while the other person was killed by a police officer whose body camera was not activated at the time. Three men ranging in age from 18 to 22 have been arrested and face charges that include felonious assault and reckless handling of a firearm, Virginia Beach police said in a statement on Saturday.

  • Australian lawmaker's online bullying leave Morrison fighting political fires

    Australian Prime Minister Scott Morrison, already under fire over his handling of rape accusations in the ruling party, reprimanded one of his lawmakers on Saturday for downplaying an apology for bullying two women constituents. Morrison ordered Andrew Laming to do an empathy course, and change his behaviour, after he posted frivolous comments on Facebook that raised doubts about the sincerity of his apology. If Morrison expelled Laming, his ruling coalition would be reduced to a minority government.

  • Georgia lawmaker arrested outside governor's office

    Georgia state Rep. Park Cannon was arrested Thursday after knocking on the door of the governor's private office while protesting a sweeping overhaul of Georgia's elections. She was released from jail later in the day. (March 26)

  • ‘He got played’: Trump mocked over tweet-like statement calling for John Durham’s report

    Lawyer resigned in February but retained his special counsel designation

  • Hilton Head teen ‘left to die in the middle of the road’ after Columbia hit-and-run

    Laer Hohmann, a 2020 Hilton Head Island High graduate, remains hospitalized with serious injuries.

  • Hundreds of migrant cross US-Mexico river border

    A growing number of families and children are entering the United States from Mexico to seek asylum. Rafts carrying about 100 people, including families with toddlers and children traveling alone, arrived one evening this week. (March 26)

  • Releasing Container Ship From Suez Canal Could Capsize It

    ReutersWhile the global shipping industry bleeds $400 million each hour the massive Ever Given container ship stays stuck in the sand of the Suez Canal, an elite salvage team on the ground in Egypt is facing an entirely different problem: How do you make a top-heavy ship stuck in shifting sands weigh less without capsizing it?“They’ll need a full survey of the seabed and canal bottom to see what the extent of grounding is,” Nick Sloane, the salvage master who miraculously led the removal of the Costa Concordia cruise ship in 2014 off the island of Giglio, told The Daily Beast. “The worst case is that the ship is presently supported over her bow and stern areas, meaning possible sags in the middle.” Those sags could lead to the ship splitting in two, spilling the fuel and cargo—which includes COVID-19 supplies like respirators and personal protection equipment made in China—into the canal, making it temporarily impassable. “The risk is that it could also become top-heavy and capsize,” Captain John Konrad, founder and CEO of the gCaptain shipping industry website, said. “And that would be catastrophic.”But before anyone can even think of lightening the massive vessel—which is 1,312 feet long and 194 feet wide, with 50 feet of the ship below the water—they would need to download the schematics of the ship and run them through a series of computer-generated programs to determine what offloading will do to the balance. Then they would have to somehow get a maritime crane to Egypt since the country does not own one tall enough to reach the top of the Ever Given’s 20,000 containers.The information used to determine how to lighten the 200,000 metric-ton ship enough to nudge it out of the sand, which buries the vessel a little more with each passing tide, will be largely based on the ship’s own records—assuming they are correct and were not fudged to pass what the Maritime Anti Corruption Network once called the most corrupt port system in the world. Just how this monster ship, which is around the size of the Empire State Building, got stuck in the canal’s riprap or sandbanks is also up for debate. The ordeal has already become the subject of a number of memes and websites, with plenty of parody Twitter accounts churning out memes of the massive excavator, which, next to the ship, looks like a child's toy chipping away at the sand on the vessel’s bow.The Suez Canal, one of the most important shipping lanes in the world, is reportedly blocked because someone accidentally got stuck with their giant container ship. The photo is unreal. pic.twitter.com/I2ACkBqPi2— Marcel Dirsus (@marceldirsus) March 23, 2021 The ship sails under a Panama flag, which is a common way to skirt human rights issues of great concern to its all-Indian crew, who are now unable to leave the vessel. It is owned by the Japanese company Shoei Kisen Kaisha, which has apologized profusely for the rather expensive inconvenience. They say heavy winds knocked the ship into the sandbanks, but data so far shows it was also traveling 13 knots in an 8-knot speed zone when the accident happened, according to Konrad. Several salvors have also said the most likely cause was a blackout power outage that compromised steering just as the wind gust came up. Coincidentally, this same ship was involved in an accident in Hamburg in 2019, when its owners rammed into a ferry and destroyed it. They had blamed the accident on a loss of steering power and high winds back then, too. Salvors say the next opportunity to move the ship will be during spring tides on Sunday and Monday. If that doesn’t work, it could take weeks to dig her out of the sand, all the while trying to keep her upright and intact. Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

  • Screw it, we'll hear you out - tell us how you'd fix the stuck Suez boat

    Honestly, what's the worst that can happen? Shoot your shot. The use of expository diagrams is actively encouraged.

  • A trans woman said she was stopped by airport security after scanners flagged her body parts as 'an anomaly'

    Rosalynne Montoya, a trans model and activist, said gendered body scans at airport security checkpoints make travel distressing for trans people.

  • Oprah Winfrey said she's fully vaccinated, and she's throwing a big taco party when her friends are too

    Winfrey said she's only left her "bubble" three times during the COVID-19 pandemic. One of those was to interview Prince Harry and Meghan Markle.

  • Civil rights groups sue Georgia over new law restricting voting access

    Several civil rights groups filed a lawsuit against Georgia election officials challenging Republican-crafted voting restrictions signed into law by Republican Gov. Brian Kemp on Thursday.Why it matters: The lawsuit from New Georgia Project, Black Voters Matter Fund and Rise alleges that the restrictions violate the Voting Rights Act of 1965 and the 14th Amendment by inflicting "unjustifiable burdens" that disproportionately affect people of color and young, poor and disabled citizens.Get market news worthy of your time with Axios Markets. Subscribe for free.The Georgia law imposes new ID requirements, limits the use of ballot drop boxes, changes early voting hours, prohibits third parties from collecting absentee ballots and bans non-poll workers from giving food and water to voters in line, among other restrictions.Kemp said at the signing of the bill on Thursday that it will ensure Georgia’s elections are "secure, accessible and fair."But, but, but: Georgia Secretary of State Brad Raffensperger, one of the defendants in the lawsuit, has repeatedly said his office found no evidence of widespread fraud in the 2020 election, despite baseless claims to the contrary by former President Trump.The big picture: Georgia is the first battleground state to enact sweeping new legislation rolling back voting rights in the wake of the 2020 election, which saw record levels of mail-in and early voting due to the pandemic. Dozens of GOP-led state legislatures have proposed similar voting restrictions, infuriating Democrats and voting rights activists.Read the lawsuit. Go deeper: Georgia lawmaker released on bond after arrest during signing of GOP voting billMore from Axios: Sign up to get the latest market trends with Axios Markets. Subscribe for free

  • Biden says he suggested to UK's Johnson a plan to rival China's Belt and Road

    U.S. President Joe Biden said he suggested to British Prime Minister Boris Johnson in a phone call on Friday that democratic countries should have an infrastructure plan to rival China's Belt and Road initiative. "I suggested we should have, essentially, a similar initiative, pulling from the democratic states, helping those communities around the world that, in fact, need help," Biden told reporters. China’s Belt and Road Initiative (BRI) is a multi-trillion-dollar infrastructure scheme launched in 2013 by President Xi Jinping involving development and investment initiatives that would stretch from East Asia to Europe.

  • Four killed as police in Bangladesh clash with protesters during visit by Indian PM

    COX'S BAZAR (Reuters) - Four people were killed after police fired on protesters who they said attacked a police station in the Bangladeshi city of Chittagong on Friday during a demonstration against a visit to the country by Indian Prime Minister Narendra Modi. Dozens were also hurt in the capital Dhaka where police used rubber bullets and teargas in clashes with violent protesters, witnesses said. In Chittagong, thousands of supporters of an Islamist group that accuses Modi of alienating minority Muslims in India streamed out of mosques after prayers to register their protest against his visit, police official Rafiqul Islam said.