The stock of Turkcell Iletisim Hizmetleri AS (NYSE:TKC, 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 $4.665 per share and the market cap of $4.1 billion, Turkcell Iletisim Hizmetleri AS stock is believed to be modestly undervalued. GF Value for Turkcell Iletisim Hizmetleri AS is shown in the chart below.
Because Turkcell Iletisim Hizmetleri AS is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth, which averaged 18.4% 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. Turkcell Iletisim Hizmetleri AS has a cash-to-debt ratio of 0.58, which which ranks in the middle range of the companies in Telecommunication Services industry. The overall financial strength of Turkcell Iletisim Hizmetleri AS is 5 out of 10, which indicates that the financial strength of Turkcell Iletisim Hizmetleri AS is fair. This is the debt and cash of Turkcell Iletisim Hizmetleri AS 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. Turkcell Iletisim Hizmetleri AS has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $3.6 billion and earnings of $0.596 a share. Its operating margin of 21.03% better than 82% of the companies in Telecommunication Services industry. Overall, GuruFocus ranks Turkcell Iletisim Hizmetleri AS's profitability as strong. This is the revenue and net income of Turkcell Iletisim Hizmetleri AS 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 Turkcell Iletisim Hizmetleri AS is 18.4%, which ranks better than 88% of the companies in Telecommunication Services industry. The 3-year average EBITDA growth rate is 28.5%, which ranks better than 81% of the companies in Telecommunication Services industry.
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted 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 ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Turkcell Iletisim Hizmetleri AS's ROIC was 16.19, while its WACC came in at 5.93. The historical ROIC vs WACC comparison of Turkcell Iletisim Hizmetleri AS is shown below:
In short, The stock of Turkcell Iletisim Hizmetleri AS (NYSE:TKC, 30-year Financials) appears to be modestly undervalued. The company's financial condition is fair and its profitability is strong. Its growth ranks better than 81% of the companies in Telecommunication Services industry. To learn more about Turkcell Iletisim Hizmetleri AS stock, you can check out its 30-year Financials here.
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