The stock of TeamViewer AG (OTCPK:TMVWY, 30-year Financials) gives every indication of being significantly 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 $22.31 per share and the market cap of $9 billion, TeamViewer AG stock gives every indication of being significantly undervalued. GF Value for TeamViewer AG is shown in the chart below.
Because TeamViewer AG is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth, which averaged 48.8% over the past three years and is estimated to grow 25.69% annually over the next three to five years.
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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. TeamViewer AG has a cash-to-debt ratio of 0.17, which is in the bottom 10% of the companies in Software industry. GuruFocus ranks the overall financial strength of TeamViewer AG at 4 out of 10, which indicates that the financial strength of TeamViewer AG is poor. This is the debt and cash of TeamViewer AG 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. TeamViewer AG has been profitable 2 years over the past 10 years. During the past 12 months, the company had revenues of $380.7 million and earnings of $0.461 a share. Its operating margin of 40.77% better than 98% of the companies in Software industry. Overall, GuruFocus ranks TeamViewer AG's profitability as poor. This is the revenue and net income of TeamViewer AG over the past years:
Growth is probably one of the most important factors 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. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Likewise, if a company's revenue and earnings are declining, the value of the company will decrease. TeamViewer AG's 3-year average revenue growth rate is better than 93% of the companies in Software industry. TeamViewer AG's 3-year average EBITDA growth rate is 146.3%, which ranks better than 99% of the companies in Software 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, TeamViewer AG's ROIC is 6.83 while its WACC came in at 5.35. The historical ROIC vs WACC comparison of TeamViewer AG is shown below:
Overall, the stock of TeamViewer AG (OTCPK:TMVWY, 30-year Financials) appears to be significantly undervalued. The company's financial condition is poor and its profitability is poor. Its growth ranks better than 99% of the companies in Software industry. To learn more about TeamViewer AG stock, you can check out its 30-year Financials here.
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