Orsted A / S stock shows every S
The stock of Orsted A / S (OTCPK: DOGEF, 30-year Financials) would be significantly overvalued, according to the calculation of GuruFocus Value. 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 stock’s price is significantly above the GF value line, it is overvalued and its future performance is likely to 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 $ 140.172 per share and market cap of $ 58.4 billion, Orsted A / S stock would be significantly overvalued. The GF value for Orsted A / S is shown in the table below.
As Orsted A / S is significantly overvalued, the long-term return on its stock is likely to be much lower than the future growth of its business, which is expected to grow by 1.67% per year over the next three to five years.
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Investing in companies with low financial strength presents a higher risk of permanent loss of capital. Thus, it is important to carefully consider the financial strength of a company before deciding whether or not to buy its shares. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a business. Orsted A / S has a cash to debt ratio of 0.75 which is better than 73% of utilities companies – independent power producers. GuruFocus ranks Orsted A / S’s overall financial strength as 5 out of 10, indicating that Orsted A / S’s financial strength is fair. Here is Orsted A / S’s debt and cash flow over the past few years:
Companies that have historically been profitable over the long term pose less risk to investors who want to buy stocks. Higher profit margins usually dictate a better investment compared to a business with lower profit margins. Orsted A / S has been profitable 5 in the past 10 years. In the past twelve months, the company reported sales of $ 6.6 billion and earnings of $ 4.157 per share. His the operating margin is 15.92%, which ranks in the mid-range of companies in the Utilities industry – Independent Power Producers. Overall, Orsted A / S’s profitability is ranked 5 out of 10, indicating acceptable profitability. Here is Orsted A / S’s sales and net income over 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 a company’s long-term market performance. A faster growing business creates more shareholder value, especially if the growth is profitable. Orsted A / S’s 3-year average annual revenue growth is -14.7%, which is worse than 83% of companies in the Utilities – Independent Power Producers industry. The average growth rate of EBITDA over 3 years is 6.7%, which is in line with the average for companies in the Utilities – Independent Power Producers sector.
A company’s profitability can also be assessed by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). 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 of its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely to create value for its shareholders. In the past 12 months Orsted A / S’s ROIC is 3.94 while its WACC is 3.10. Orsted A / S’s historical ROIC vs WACC comparison is shown below:
In conclusion, the share of Orsted A / S (OTCPK: DOGEF, 30 years Financials) is estimated to be significantly overvalued. The company’s financial position is fair and its profitability is fair. Its growth is in the mid-range of companies in the Utilities industry – Independent Power Producers. To find out more about the Orsted A / S share, you can view its 30-year financial data here.
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