The stock of Schneider National (NYSE:SNDR, 30-year Financials) appears to be fairly valued, 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 $23.67 per share and the market cap of $4.2 billion, Schneider National stock appears to be fairly valued. GF Value for Schneider National is shown in the chart below.
Because Schneider National is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 0.1% over the past three years and is estimated to grow 4.29% annually over the next three to five years.
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It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Schneider National has a cash-to-debt ratio of 1.69, which is better than 83% of the companies in Transportation industry. The overall financial strength of Schneider National is 7 out of 10, which indicates that the financial strength of Schneider National is fair. This is the debt and cash of Schneider National 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. Schneider National has been profitable 8 years over the past 10 years. During the past 12 months, the company had revenues of $4.7 billion and earnings of $1.25 a share. Its operating margin of 6.65% in the middle range of the companies in Transportation industry. Overall, GuruFocus ranks Schneider National's profitability as fair. This is the revenue and net income of Schneider National 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 Schneider National is 0.1%, which ranks in the middle range of the companies in Transportation industry. The 3-year average EBITDA growth is 0.3%, which ranks in the middle range of the companies in Transportation 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, Schneider National's ROIC was 8.72, while its WACC came in at 7.46. The historical ROIC vs WACC comparison of Schneider National is shown below:
In short, the stock of Schneider National (NYSE:SNDR, 30-year Financials) is estimated to be fairly valued. The company's financial condition is fair and its profitability is fair. Its growth ranks in the middle range of the companies in Transportation industry. To learn more about Schneider National stock, you can check out its 30-year Financials here.
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