Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap

GuruFocus.com
·4 min read

- By GF Value

The stock of Xinyuan Real Estate Co (NYSE:XIN, 30-year Financials) is believed to be possible value trap, 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 $2.5166 per share and the market cap of $135.1 million, Xinyuan Real Estate Co stock gives every indication of being possible value trap. GF Value for Xinyuan Real Estate Co is shown in the chart below.


Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap
Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap

The reason we think that Xinyuan Real Estate Co stock might be a value trap is because Xinyuan Real Estate Co has an Altman Z-score of 0.68, which indicates that the financial condition of the company is in the distressed zone and implies a higher risk of bankruptcy. An Altman Z-score of above 2.99 would be better, indicating safe financial conditions. To learn more about how the Z-score measures the financial risk of the company, please go here.

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. Xinyuan Real Estate Co has a cash-to-debt ratio of 0.32, which is in the middle range of the companies in Real Estate industry. GuruFocus ranks the overall financial strength of Xinyuan Real Estate Co at 3 out of 10, which indicates that the financial strength of Xinyuan Real Estate Co is poor. This is the debt and cash of Xinyuan Real Estate Co over the past years:

Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap
Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap

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. Xinyuan Real Estate Co has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $2 billion and loss of $0.174 a share. Its operating margin of 3.66% worse than 71% of the companies in Real Estate industry. Overall, GuruFocus ranks Xinyuan Real Estate Co's profitability as strong. This is the revenue and net income of Xinyuan Real Estate Co over the past years:

Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap
Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap

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 performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Xinyuan Real Estate Co is 24.2%, which ranks better than 82% of the companies in Real Estate industry. The 3-year average EBITDA growth rate is 30.2%, which ranks better than 82% of the companies in Real Estate industry.

One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). 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. If the return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Xinyuan Real Estate Co's ROIC is 0.00 while its WACC came in at 1.60. The historical ROIC vs WACC comparison of Xinyuan Real Estate Co is shown below:

Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap
Xinyuan Real Estate Co Stock Appears To Be Possible Value Trap

In short, the stock of Xinyuan Real Estate Co (NYSE:XIN, 30-year Financials) gives every indication of being possible value trap. The company's financial condition is poor and its profitability is strong. Its growth ranks better than 82% of the companies in Real Estate industry. To learn more about Xinyuan Real Estate Co 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

  • Panthers trade quarterback Teddy Bridgewater to Denver Broncos for 6th-round pick

    Teddy Bridgewater spent just one season in Carolina after signing a three-year, $63 million deal.

  • Michael Collins, the Apollo Astronaut Who Kept His Eye on the Bigger Picture, Dead at 90

    NASA/AFP/GettyBy now many Americans have forgotten that astronauts Neil Armstrong and Buzz Aldrin weren’t alone as they took humankind’s first steps on the surface of the moon on July 20, 1969.Orbiting some 60 miles overhead in the Apollo 11 command module, 38-year-old Michael Collins enjoyed a brief moment of peace and quiet as the module passed around the dark side of the moon, cutting off all communication with Earth.“It was a wonderful experience,” Collins said in 2016. “The fact that it was quiet—silent, utterly—was good, not bad. It gave me some time off of mission control telling me to do this and that.”That contentment and calm—in stark contrast to the late Armstrong’s stalwart statesmanship and Aldrin’s romantic volatility—defined Collins’ long life. The man who shepherded the first two men to stand on the moon died on April 28 at the age of 90. 476974165 Astronaut Michael Collins prepares to board for the beginning of the Apollo 11 mission to the moon on July 16, 1969. NASA Michael Collins was born in Rome, on Halloween 1930. His father was career U.S. Army officer James Lawton Collins, who would eventually fight in three wars. His mother, Virginia Collins, née Stewart, was an educated woman who traced her lineage in America to the years before the Revolutionary War.Graduating high school in 1948, the boy followed in his father’s footsteps and enrolled in the U.S. Military Academy at West Point. He became a fighter pilot flying F-86 jets. In 1956, he was forced to eject from his plane after it burst into flames over France. “It was 10 percent shrewd planning and 90 percent blind luck” that he survived his flying career, Collins said later. “Put ‘lucky’ on my tombstone.”Collins met his future wife, Patricia Finnegan, the daughter of a Massachusetts state senator, at an Air Force club. They married in 1957 and had three children. While serving as a test pilot in 1962, Collins applied to be an astronaut. NASA rejected him. “It ain’t pleasant,” he later said of his early failure.He applied to NASA again in 1963. This time, the space agency said yes.On July 18, 1966, Collins and astronaut John W. Young launched into Earth’s orbit aboard the Gemini 10 mission—America’s 16th manned spaceflight. Collins completed his first, modest spacewalk, briefly standing in the open hatch of the capsule in order to take photos.The brief spacewalk shaped his future in ways Collins might not have appreciated at the time. NASA decided that for the Apollo 11 mission, the pilot of the command module should have “extravehicular” experience. Collins would have to stay in the module while Armstrong and Aldrin descended to the lunar surface.Buzz Aldrin: Neil Armstrong Was ‘The Best Pilot I Ever Knew’Before liftoff from Cape Canaveral, Collins’ wife penned him a poem. “Take my silence, though intended,” she wrote. “Fill it with the joy you feel. Take my courage, now pretended—you, my love, will make it real.” 476974335 President Richard Nixon and the Apollo 11 astronauts exchange “A-OK” signs through the window of the Mobile Quarantine Facility on July 25, 1969, aboard the USS Hornet. Astronauts (L-R) Neil Armstrong, Michael Collins, and Buzz Aldrin splashed down in the Pacific Ocean on July 24, 900 miles southwest of Hawaii at the completion of their successful lunar landing mission. NASA/AFP/Getty Orbiting in the darkness and silence while Aldrin and Armstrong were cementing their future fame, Collins reflected on the planet he’d left behind. “I really believe that if the political leaders of the world could see their planet from a distance of 100,000 miles, their outlook could be fundamentally changed,” he said decades later.“That all-important border would be invisible, that noisy argument silenced. The tiny globe would continue to turn, serenely ignoring its subdivisions, presenting a unified façade that would cry out for unified understanding, for homogeneous treatment. The Earth must become as it appears: blue and white, not capitalist or communist; blue and white, not rich or poor; blue and white, not envious or envied.”“Small, shiny, serene, blue and white. Fragile.” 150794832 The crew of the Apollo 11 lunar landing mission gives a press conference on July 19, 1969. AFP/Getty Returning to Earth, Collins spent a year working for the State Department before retiring from NASA, and public life, in 1970. He oversaw the National Air and Space Museum from 1971 to 1978 and worked for LTV Aerospace for five years, resigning in 1985 to found his own consulting firm.Collins wrote four books, but he never aspired to national politics like Armstrong did or pop-culture fame like Aldrin did. He and Patricia settled into a quiet retirement in the Everglades. Patricia died in 2014.The widower and former astronaut stayed busy running, painting, and playing the stock market. “I’m a good retiree in that I have a lot of hobbies,” Collins said in 2016. He advocated on behalf of NASA for a mission to Mars but otherwise avoided the spotlight.“Some things about current society irritate me, such as the adulation of celebrities and the inflation of heroism,” Collins said in 2009. “Heroes abound, and should be revered as such, but don’t count astronauts among them. We work very hard. We did our jobs to near perfection, but that was what we had hired on to do.”Read more at The Daily Beast.Got a tip? Send it to The Daily Beast hereGet 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.

  • 19 of the most notorious feuds between actors and directors

    Hollywood can be catty. Here are 19 instances of actors and their directors clashing on set - and off.

  • Jada Pinkett Smith says Justin Bieber and Hailey Baldwin work as a married couple because 'they agree on God'

    The couple wed in September 2018. Pinkett Smith spoke about the "beautiful couple" and their faith during the latest episode of "Red Table Talk."

  • Man dies after being pinned to the ground for five minutes by California police

    City of Alameda release 911 audio and body camera footage of police altercation

  • College football coach fired over tweet mocking Stacey Abrams fights back with lawsuit

    Chris Malone, formerly an assistant football coach in Tennessee, is a victim of “cancel culture,” his attorney said.

  • Boy dies from COVID on Hawaii vacation with fully vaccinated parents, officials say

    The child was 10 years old or younger, officials said.

  • Boy dies from COVID on Hawaii vacation with fully vaccinated parents, officials say

    The child was 10 years old or younger, officials said.

  • Chazz and Sage Surratt are 2 of the best athletes NC has ever seen. Their NFL dream awaits

    The Surratt brothers, Chazz and Sage, will both likely be picked in the 2021 NFL draft

  • How much protection you get from one shot of the Pfizer, AstraZeneca, and Moderna vaccines, according to the best available data

    One shot of Pfizer or Moderna vaccines appears at least 80% effective against symptomatic COVID-19 for at least 21 days. For AstraZeneca, it's 70%.

  • Spotify reports strong Q1 revenue as Joe Rogan podcast exceeds expectations

    Spotify on Wednesday reported strong Q1 revenue growth, fueled by positive subscriber additions and strong ad sales, as well as lowered headwinds from foreign exchange rates. The big picture: The Swedish tech giant noted that increased subscriber growth and user engagement can be attributed in part to the better-than-expected performance of "The Joe Rogan Experience," a podcast it acquired exclusively for over $100 million. Get market news worthy of your time with Axios Markets. Subscribe for free.Spotify came under fire Tuesday for anti-vaccination comments made by Joe Rogan, the host of the podcast. Rogan has long been considered one of the top podcasters in the world, but his brash personality has at times caused Spotify content moderation headaches. By the numbers: Revenue increased 16% year-over-year to €2.147 billion for the quarter ending on March 31, exceeding analyst expectations. User growth: Spotify added 11 million monthly active users (DAUs), bringing its total active user based to 356 million globally. Subscriber growth: The company added 4 million subscribers to its premium plan, bringing its paid subscriber count to over 158 million globally. The big picture: Podcasting continues to be a point of growth for the company, although Spotify concedes that the revenue it's making from podcasts — while strong — is being offset by slightly higher costs, weighing on its gross margins.Spotify says that by Q1's end, it had 2.6 million podcasts on the platform, up from more than 2.2 million podcasts by the end of Q4 2020 and 700,000 in Q4 2019.On Tuesday, Spotify launched a new subscription podcast platform that gives creators the ability to create podcasts exclusively for paid subscribers on and off Spotify.What's next: The company says it expects to hit at least 402 million monthly active users and at least 172 million premium subscribers by year's end.More from Axios: Sign up to get the latest market trends with Axios Markets. Subscribe for free

  • Prince Andrew’s Expulsion From Public Life Cemented by Charles Taking His Key Patronage

    Yui MokJust for a moment after the death of his father, Prince Philip, it looked like his wayward son, Prince Andrew, was working—or perhaps worming—his way back into the frontline of royal life.He popped up on TV screens giving a brief impromptu interview in which he spoke of his mother’s grief.Did Prince Andrew Really Just Use Prince Philip’s Death to Sneak Back on TV?He came close to pulling off a coup by using the funeral to claim his naval position as admiral—a post he was due to inherit on his 60th birthday, but voluntarily deferred as the Epstein scandal blew up. A London tailor was said to have been busy making his admiral’s suit when the queen intervened, ordering all men to wear civvies.While this decision artfully avoided Andrew’s request for a promotion, it was in fact specifically targeted at sparing Harry the humiliation of being the only male Windsor on parade that day not in military uniform. Andrew is quite entitled to wear the military uniform of a vice admiral, a position he still holds. Unlike Harry, he was never forced to give up his military associations. It was notable that he was seated next to his mother at the funeral (although COVID rules mandated an empty seat between them).It appeared to many that Andrew was using the crisis of his father’s death and his status as his mother’s favorite to achieve his long-held dream—a comeback to royal life. But Buckingham Palace pushed back hard against that impression, briefing certain newspapers that Andrew had been freelancing when he made his on-camera appearance.Dan Wootton, the journalist who first broke the news that Harry and Meghan were leaving the U.K., reported in the Daily Mail that sources had told him: “Prince Andrew might hope that this sad situation changes things, but Prince Charles is adamant there is no way back while allegations hang over him. He spoke on camera in a private capacity because this is a family event. No one can stop him doing that.”Then, this week, a succession of curious events befell Andrew; first, his establishment of a business with a dubious former private banker was exposed and swiftly wound up and then on Tuesday evening it was announced that Prince Charles was to be the new patron of Britain’s premier musical ensemble, the Royal Philharmonic Orchestra.The timing of the announcement seems far from accidental. The patronage of the Royal Philharmonic Orchestra (RPO) was one of Andrew’s most significant roles and for Charles to take it on, as the organization prepares to mark its 75th anniversary, is a message of such non-subtlety that even the rhino-skinned Andrew will not be able to miss it.He may be his mother’s favorite, but there will be no room at the inn for him under the reign of King Charles. A source close to Andrew told The Daily Beast: “The Duke remains stepped back from royal duties until the legal process has been resolved. Until then, the Duke is sensitive to the public mood and to the fact that the institution must come first.”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.

  • Grand Canyon seeks volunteers to kill bison within the park. Here’s why

    Volunteers also will need to haul bison carcasses, which can be very heavy.

  • Edmunds: Five new EVs to wait for in 2021

    Electric vehicle shoppers have an increasing number of models to choose from. There are nearly two dozen EVs on the market today, and that selection will only grow over the next eight months. Here are five upcoming EVs, organized by price, that the experts at Edmunds are most excited to see in 2021.

  • India's official death toll tops 200,000. Experts say the actual number is much higher.

    India's COVID-19 death toll surged past 200,000 on Wednesday, as the country set another daily global cases record.Of note: Medical experts and members of India's opposition parties say the actual death toll and case numbers are much higher, a charge Prime Minister Narendra Modi's ruling Bharatiya Janata Party denies.Get market news worthy of your time with Axios Markets. Subscribe for free.By the numbers: India's health ministry reported a record 360,960 new coronavirus cases, taking the total to nearly 18 million since the pandemic began.It recorded another 3,293 deaths, taking the official toll to 201,187.Driving the news: A New York Times investigation published Tuesday found "mounting evidence" suggesting fatalities are being "overlooked or downplayed." Local medical workers said officials were worried about creating a "panic," the NYT reports.University of Michigan epidemiologist Bhramar Mukherjee, who's been following the pandemic in India closely, told the Times, "From all the modeling we've done, we believe the true number of deaths is two to five times what is being reported."What they're saying: Ramanan Laxminarayan, director of the Center for Disease Dynamics, Economics and Policy in New Delhi, told CNN Tuesday, "It's widely known that both the case numbers and the mortality figures are undercounts, they always have been."Last year we estimated that only one in about 30 infections were being caught by testing, so the reported cases are a serious underestimate of true infections. This time, the mortality figures are probably serious underestimates, and what we're seeing on the ground is many more deaths, than what has been officially reported."LaxminarayanThe big picture: Hospitals across the country are overwhelmed with coronavirus patients amid a widespread oxygen shortage and sluggish vaccine rollout. Indian Medical Association Vice President Navjot Dahiya on Monday called Modi a "super-spreader" for holding "big political rallies" for the state elections earlier this month, per the Tribune India. "The scarcity of medical oxygen has become the reason for the death of many patients in every part of the country against the fact that several projects for installing the oxygen are still pending," he said.What to watch: Aid has begun arriving in India from abroad, Channel News Asia notes. The U.S. is among the countries sending vital supplies. President Biden told reporters at the White House Tuesday, "I think we'll be in a position to be able to ... share vaccines as well as know-how with other countries who are in real need."Go deeper: U.S. to send India supplies as country faces record COVID surgeEditor's note: This article has been updated with new details throughout.More from Axios: Sign up to get the latest market trends with Axios Markets. Subscribe for free

  • Are you a healthcare worker who worked on the frontline of the COVID-19 pandemic? We want to hear from you.

    If you're a healthcare worker who particularly relates to this, please reach out to salarshani@insider.com.

  • Idaho wants to make it illegal for schools to teach students how to think critically about racism

    The bill bans public schools from teaching that "any sex, race, ethnicity, religion, color, or national origin is inherently superior or inferior."

  • Navy SEALs to shift from counterterrorism to global threats

    Ten years after they found and killed Osama bin Laden, U.S. Navy SEALs are undergoing a major transition to improve leadership and expand their commando capabilities to better battle threats from global powers like China and Russia. The new plan cuts the number of SEAL platoons by as much as 30% and increases their size to make the teams more lethal and able to counter sophisticated maritime and undersea adversaries. Rear Adm. H. Wyman Howard III, top commander for the SEALs, laid out his plans in an exclusive interview with The Associated Press.

  • New York Post reporter quits over 'incorrect' Kamala Harris book story she was 'ordered to write'

    The New York Post published a front-page story Friday claiming Vice President Kamala Harris' 2019 children's book is being handed to migrant children in "welcome kits," and the tabloid followed-up with an article Monday claiming "thousands" of copies are being given to migrant children and the White House had "no answers" when asked if Harris was profiting from these purported welcome packages. Reporters from other news organizations pointed out Tuesday morning that basically the entire story is false — one copy of Superheroes Are Everywhere had been donated to one shelter in Long Beach, California — and the Post and Fox News pulled their articles then appended "editor's notes" to mostly corrected versions. On Tuesday night, the longtime Post reporter who wrote Friday's cover story tweeted that she had resigned, claiming she "was ordered to write" the "incorrect story." The Kamala Harris story -- an incorrect story I was ordered to write and which I failed to push back hard enough against -- was my breaking point. — Laura Italiano (@Italiano_Laura) April 27, 2021 The reporter, Laura Italiano, "has written for the Post since the 1990s," The Washington Post reports. She has not disclosed who "ordered" her to write the article. But by Tuesday, the false suggestion that the government was buying copies of the vice president's book and giving it to migrant children had spent days spreading over conservative and social media, promoted by Republican Party officials and prominent lawmakers. Fox News this past week has already prominently promoted (and more quietly retracted) a whopper that President Biden wants to cut American meat consumption by 90 percent, and Fox News also reported falsely that Virginia is moving to eliminate advanced high school math classes. Depending on how you judge these things, it was either a bad week for conservative journalism or a great week for right-wing media. Or both. More stories from theweek.comFauci urges young people to ignore Joe Rogan's 'incorrect' vaccine adviceLumber is shockingly expensive. Thanks, Obama.Netflix is launching its own version of channel surfing

  • AP sources: Feds search Rudy Giuliani's NYC home, office

    Federal investigators executed search warrants Wednesday morning at the Manhattan home and office of Rudy Giuliani, former President Donald Trump’s attorney, a law enforcement official told The Associated Press. The former New York City mayor has been under investigation for several years over his business dealings in Ukraine. Details of the searches were not immediately available, but it comes as the Justice Department continues its investigation into the former New York City mayor and staunch Trump ally.