The stock of Kuehne + Nagel International AG (OTCPK:KHNGF, 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 $316.05 per share and the market cap of $37.9 billion, Kuehne + Nagel International AG stock appears to be significantly overvalued. GF Value for Kuehne + Nagel International AG is shown in the chart below.
Because Kuehne + Nagel International AG is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 3.1% over the past three years and is estimated to grow 3.51% annually over the next three to 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. Kuehne + Nagel International AG has a cash-to-debt ratio of 0.89, which which ranks better than 74% of the companies in Transportation industry. The overall financial strength of Kuehne + Nagel International AG is 6 out of 10, which indicates that the financial strength of Kuehne + Nagel International AG is fair. This is the debt and cash of Kuehne + Nagel International AG over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Kuehne + Nagel International AG has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $23.4 billion and earnings of $8.762 a share. Its operating margin is 5.96%, which ranks in the middle range of the companies in Transportation industry. Overall, the profitability of Kuehne + Nagel International AG is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Kuehne + Nagel International AG over the past years:
One of the most important factors in the valuation of a company is growth. Long-term stock performance is closely correlated with growth according to GuruFocus research. Companies that grow faster create more value for shareholders, especially if that growth is profitable. The average annual revenue growth of Kuehne + Nagel International AG is 3.1%, which ranks in the middle range of the companies in Transportation industry. The 3-year average EBITDA growth is 15.6%, which ranks better than 74% of the companies in Transportation 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, Kuehne + Nagel International AG's ROIC is 13.27 while its WACC came in at 6.66. The historical ROIC vs WACC comparison of Kuehne + Nagel International AG is shown below:
In closing, Kuehne + Nagel International AG (OTCPK:KHNGF, 30-year Financials) stock appears to be significantly overvalued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 74% of the companies in Transportation industry. To learn more about Kuehne + Nagel International AG stock, you can check out its 30-year Financials here.
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