Forward Air Corp (FWRD, Financial) experienced a daily gain of 2.35% and a 3-month loss of 34.02%. Despite the recent loss, the company has a healthy Earnings Per Share (EPS) (EPS) of 5.66. This article seeks to answer the question: Is Forward Air (FWRD) significantly undervalued? To answer this, we delve into a comprehensive valuation analysis of the company.
An Introduction to Forward Air Corp (FWRD, Financial)
Forward Air Corp is an asset-light freight and logistics company with a market capitalization of $1.80 billion. It operates through two main segments: Expedited Freight and Intermodal. The Expedited Freight segment generates the most revenue by offering comprehensive national network services, including expedited regional, inter-regional, and national LTL (less-than-truckload) services, local pick-up and delivery, final mile, truckload, shipment consolidation and deconsolidation, warehousing, and customs brokerage.
Understanding the GF Value of Forward Air (FWRD, Financial)
The GF Value is a proprietary method used to estimate the intrinsic value of a stock. This valuation is based on historical trading multiples, an adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line, displayed on our summary page, represents the fair value at which the stock should ideally be traded.
Forward Air's current stock price is $69.67 per share. According to our GF Value estimation, the stock appears to be significantly undervalued. This suggests that the long-term return of Forward Air's stock is likely to be much higher than its business growth.
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Assessing Forward Air's Financial Strength
Investing in companies with poor financial strength can lead to a high risk of permanent capital loss. To avoid this, it's crucial to review a company's financial strength before purchasing shares. One way to understand a company's financial strength is by looking at its cash-to-debt ratio and interest coverage. Forward Air has a cash-to-debt ratio of 0.06, ranking worse than 90.04% of 934 companies in the Transportation industry. However, the overall financial strength of Forward Air is 7 out of 10, indicating fair financial strength.
Profitability and Growth of Forward Air
Investing in profitable companies carries less risk. This is particularly true for companies that have demonstrated consistent profitability over the long term. Forward Air has been profitable for 10 years over the past 10 years. In the past 12 months, the company had revenues of $1.80 billion and an EPS of $5.66. Its operating margin of 11.74% is better than 62.33% of 945 companies in the Transportation industry. Overall, GuruFocus ranks Forward Air's profitability as strong.
Growth is an important factor in the valuation 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 Forward Air is 19.5%, which ranks better than 79.54% of 909 companies in the Transportation industry. The 3-year average EBITDA growth rate is 30.3%, which ranks better than 76.74% of 817 companies in the Transportation industry.
Another way to assess a company's profitability is by comparing its return on invested capital (ROIC) and the weighted cost of capital (WACC). Forward Air's ROIC is 14.87, and its WACC is 10.8. This indicates that the company generates a higher return on its capital than the cost of that capital.
Conclusion
In summary, the stock of Forward Air (FWRD, Financial) shows every sign of being significantly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 76.74% of 817 companies in the Transportation industry. To learn more about Forward Air stock, you can check out its 30-Year Financials here.
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