With a daily gain of 6.38%, a 3-month loss of 4.29%, and an Earnings Per Share (EPS) of 2.99, Minerals Technologies Inc (MTX, Financial) presents an interesting case for value investors. This analysis aims to determine whether the stock is significantly undervalued, as suggested by our proprietary GF Value. The following sections provide an in-depth analysis of the company's valuation, financial strength, profitability, and growth.
Company Introduction
Minerals Technologies Inc is a leading miner, producer, and seller of mineral-based products. The company operates in three segments based on product type: specialty minerals, refractories, and performance materials. The majority of its revenue comes from the United States. With a current stock price of $53.34, the company's GF Value, an estimate of its fair value, stands at $77.99, suggesting that the stock may be significantly undervalued.
Understanding GF Value
The GF Value is a unique valuation method that estimates a stock's intrinsic value. It is based on three key factors: historical multiples at which the stock has traded, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of business performance. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded.
According to our GF Value, the stock of Minerals Technologies (MTX, Financial) is significantly undervalued. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. To avoid this, it's crucial to examine a company's financial strength before deciding to purchase shares. Key indicators of financial strength include the cash-to-debt ratio and interest coverage. Minerals Technologies has a cash-to-debt ratio of 0.25, ranking worse than 74.12% of 1507 companies in the Chemicals industry. However, the overall financial strength of Minerals Technologies is fair, with a score of 6 out of 10.
Profitability and Growth
Investing in profitable companies carries less risk, especially if they have demonstrated consistent profitability over the long term. Minerals Technologies, with high profit margins, offers better performance potential than companies with low profit margins. The company has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $2.10 billion and Earnings Per Share (EPS) of $2.99. Its operating margin of 11.41% is better than 71.24% of 1523 companies in the Chemicals industry. Overall, GuruFocus ranks Minerals Technologies's profitability as fair.
However, growth is one of the most important factors in the valuation of a company. The average annual revenue growth of Minerals Technologies is 8.3%, ranking worse than 54.41% of 1450 companies in the Chemicals industry. The 3-year average EBITDA growth is 1.8%, which ranks worse than 66.17% of 1342 companies in the Chemicals industry.
ROIC vs WACC
Another way to assess the profitability of a company is to compare its return on invested capital (ROIC) with the weighted cost of capital (WACC). ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. Ideally, ROIC should be higher than WACC. For the past 12 months, Minerals Technologies's ROIC is 6.49, and its cost of capital is 8.14.
Conclusion
In conclusion, the stock of Minerals Technologies (MTX, Financial) is believed to be significantly undervalued. The company's financial condition is fair, and its profitability is fair. However, its growth ranks worse than 66.17% of 1342 companies in the Chemicals industry. For more information about Minerals Technologies stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
