NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being ...

GuruFocus.com
·4 min read

- By GF Value

The stock of NiSun International Enterprise Development Group C (NAS:NISN, 30-year Financials) shows every sign 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 $16.86 per share and the market cap of $426.9 million, NiSun International Enterprise Development Group C stock is estimated to be significantly overvalued. GF Value for NiSun International Enterprise Development Group C is shown in the chart below.


NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being Significantly Overvalued
NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being Significantly Overvalued

Because NiSun International Enterprise Development Group C is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.

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. NiSun International Enterprise Development Group C has a cash-to-debt ratio of 10.33, which which ranks better than 78% of the companies in Industrial Products industry. The overall financial strength of NiSun International Enterprise Development Group C is 7 out of 10, which indicates that the financial strength of NiSun International Enterprise Development Group C is fair. This is the debt and cash of NiSun International Enterprise Development Group C over the past years:

NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being Significantly Overvalued
NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being Significantly Overvalued

It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. NiSun International Enterprise Development Group C has been profitable 6 over the past 10 years. Over the past twelve months, the company had a revenue of $34.6 million and loss of $0.13 a share. Its operating margin is 24.98%, which ranks better than 96% of the companies in Industrial Products industry. Overall, the profitability of NiSun International Enterprise Development Group C is ranked 6 out of 10, which indicates fair profitability. This is the revenue and net income of NiSun International Enterprise Development Group C over the past years:

NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being Significantly Overvalued
NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being 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 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 NiSun International Enterprise Development Group C is -16.8%, which ranks in the bottom 10% of the companies in Industrial Products industry. The 3-year average EBITDA growth rate is -26.4%, which ranks in the bottom 10% of the companies in Industrial Products 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, NiSun International Enterprise Development Group C's return on invested capital is 11.34, and its cost of capital is 7.84. The historical ROIC vs WACC comparison of NiSun International Enterprise Development Group C is shown below:

NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being Significantly Overvalued
NiSun International Enterprise Development Group C Stock Shows Every Sign Of Being Significantly Overvalued

In summary, The stock of NiSun International Enterprise Development Group C (NAS:NISN, 30-year Financials) appears to be significantly overvalued. The company's financial condition is fair and its profitability is fair. Its growth ranks in the bottom 10% of the companies in Industrial Products industry. To learn more about NiSun International Enterprise Development Group C 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.

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