Appearance of the national beverage stock – GuruFocus.com
National Beverage (NAS: FIZZ, 30-year Financials) stock is showing all signs of modest overvaluation, according to GuruFocus’s valuation calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 45.76 per share and market cap of $ 4.3 billion, National Beverage stock is estimated to be slightly overvalued. The GF value for national drinks is shown in the table below.
Given that National Beverage is relatively overvalued, its long-term stock return is likely to be lower than its business growth, which has averaged 6.5% over the past three years and is expected to grow 4.11. % per year over the next three to five years.
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Companies with poor financial strength present investors with a high risk of permanent capital loss. To avoid a permanent loss of capital, an investor should do his research and consider the financial strength of a company before deciding to buy stocks. Both cash-to-debt ratio and covering a company’s interests are a great way to understand its financial strength. National Beverage has a cash-to-debt ratio of 3.79, which ranks better than 72% of companies in the beverage – nonalcoholic sector. The overall financial strength of National Beverage is 7 out of 10, which indicates that the financial strength of National Beverage is fair. Here is National Beverage’s debt and cash flow for the past few years:
It is less risky to invest in profitable companies, especially those whose profitability is constant over the long term. A business with high profit margins is generally a safer investment than one with low profit margins. National Beverage has been profitable 10 in the past 10 years. In the past twelve months, the company reported sales of $ 1.1 billion and earnings of $ 1.825 per share. His the operating margin is 20.75%, which ranks better than 87% of companies in the Beverage – Non-Alcoholic industry. Overall, National Beverage’s profitability is ranked 8 out of 10, indicating strong profitability. Here is National Beverage’s sales and net income for the past few years:
Growth is probably the most important factor in the valuation of a business. GuruFocus research has shown that growth is closely tied to the long-term performance of a company’s stocks. The faster a company grows, the more likely it is to create shareholder value, especially if the growth is profitable. National Beverage’s 3-year average annual revenue growth rate is 6.5%, which ranks better than 70% of companies in the non-alcoholic beverage industry. The 3-year average EBITDA growth rate is 3.7%, which is within the average for companies in the Beverage – Non-Alcoholic industry.
Another method of determining a company’s profitability is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) The extent to which a business 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 should pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies that the company creates value for the shareholders. Over the past 12 months, National Beverage’s return on invested capital is 74.75 and its cost of capital is 7.89. National Beverage’s historical ROIC vs WACC comparison is shown below:
In conclusion, the stock of National Beverage (NAS: FIZZ, 30-year Financials) is estimated to be slightly overvalued. The company’s financial position is fair and its profitability is solid. Its growth is in the mid-range of companies in the Beverage – Non-Alcoholic industry. To learn more about the National Beverage share, you can view its 30-year financial data here.
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