Logitech International SA (LOGI, Financial) recently recorded a daily loss of 5.01%, despite a significant 3-month gain of 21.89%. The company's Earnings Per Share (EPS) stands at 2.01, raising the question: is the stock fairly valued? This article delves into the valuation analysis of Logitech International SA (LOGI), providing valuable insights for potential investors.
Company Overview
Logitech International SA is a renowned provider of personal computer and mobile accessories. Based in Switzerland, the company's product range includes mice, keyboards, charging stands, tablet cases, car mounts for mobile devices, remotes, home cameras, home switches, controllers, Bluetooth speakers, surround sound, webcams, and conference cameras. The company operates in a single segment, Peripherals, generating revenue from the Americas, EMEA (Europe, Middle East, Africa), and the Asia Pacific region.
Logitech International SA's current stock price is $65.35, with a market cap of $10.40 billion. When compared to the GF Value of $63.31, it appears that the stock is fairly valued. This valuation is based on a thorough analysis of the company's financial performance and market trends. Here's a look at the income breakdown of Logitech International SA:
Understanding GF Value
The GF Value is a unique measure of a stock's intrinsic value. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
According to GuruFocus, the stock of Logitech International SA appears to be fairly valued. The GF Value estimates the stock's fair value based on historical multiples, an internal adjustment factor based on the company's past business growth, and analyst estimates of future business performance. If the stock's share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. Conversely, if the stock's share price is significantly below the GF Value Line, the stock may be undervalued and have high future returns. At its current price of $65.35 per share, Logitech International SA appears to be fairly valued.
Because Logitech International SA is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
Company's Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding whether to buy shares. Logitech International SA has a cash-to-debt ratio of 17.14, which ranks better than 81.29% of 2373 companies in the Hardware industry. Based on this, GuruFocus ranks Logitech International SA's financial strength as 8 out of 10, suggesting a strong balance sheet.
Profitability and Growth
Investing in profitable companies, especially those that have demonstrated consistent profitability over the long term, poses less risk. Logitech International SA has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $4.40 billion and Earnings Per Share (EPS) of $2.01. Its operating margin is 10.59%, which ranks better than 77.53% of 2457 companies in the Hardware industry. Overall, GuruFocus ranks the profitability of Logitech International SA at 9 out of 10, indicating strong profitability.
Company's Growth
Growth is one of the most important factors in the valuation of a company. Logitech International SA's 3-year average revenue growth rate is better than 78.48% of 2333 companies in the Hardware industry. Logitech International SA's 3-year average EBITDA growth rate is 16.6%, which ranks better than 60.58% of 1961 companies in the Hardware industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. 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, Logitech International SA's ROIC was 21.76, while its WACC came in at 4.71.
Conclusion
In summary, the stock of Logitech International SA (LOGI, Financial) shows every sign of being fairly valued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 60.58% of 1961 companies in the Hardware industry. To learn more about Logitech International SA stock, you can check out its 30-Year Financials here.
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