Robinson Europe SA Stock Gives Every Indication Of Being Modestly Undervalued
- By GF Value
The stock of Robinson Europe SA (WAR:RBS, 30-year Financials) appears to be modestly undervalued, 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 z?6.1 per share and the market cap of z?11.3 million, Robinson Europe SA stock appears to be modestly undervalued. GF Value for Robinson Europe SA is shown in the chart below.
Because Robinson Europe SA is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth, which averaged 7.7% over the past five years.
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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. Robinson Europe SA has a cash-to-debt ratio of 10000.00, which which ranks better than 100% of the companies in the industry of Retail - Cyclical. The overall financial strength of Robinson Europe SA is 5 out of 10, which indicates that the financial strength of Robinson Europe SA is fair. This is the debt and cash of Robinson Europe SA 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. Robinson Europe SA has been profitable 9 years over the past 10 years. During the past 12 months, the company had revenues of z?19.7 million and earnings of z?0.81 a share. Its operating margin of 11.65% better than 86% of the companies in the industry of Retail - Cyclical. Overall, GuruFocus ranks Robinson Europe SA's profitability as fair. This is the revenue and net income of Robinson Europe SA 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 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 Robinson Europe SA is 7.7%, which ranks better than 72% of the companies in the industry of Retail - Cyclical. The 3-year average EBITDA growth rate is -7.6%, which ranks worse than 73% of the companies in the industry of Retail - Cyclical.
Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average 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. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Robinson Europe SA's return on invested capital is 8.62, and its cost of capital is 6.57. The historical ROIC vs WACC comparison of Robinson Europe SA is shown below:
In summary, Robinson Europe SA (WAR:RBS, 30-year Financials) stock is estimated to be modestly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks worse than 73% of the companies in the industry of Retail - Cyclical. To learn more about Robinson Europe SA stock, you can check out its 30-year Financials here.
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This article first appeared on GuruFocus.
