Investors are often on the lookout for stocks that match or exceed market performance, and Rush Enterprises Inc (RUSHA, Financial) has shown promising signs with a daily gain of 6.4% and a 3-month gain of 16.36%. With an Earnings Per Share (EPS) of $4.35, the question arises: Is the stock fairly valued? This article delves into a valuation analysis to provide a clearer picture, inviting readers to explore the intricate details of Rush Enterprises' market position.
Company Overview
Rush Enterprises Inc is a powerhouse in the commercial vehicle retail industry, offering a comprehensive range of services under the Rush Truck Centers banner. Specializing in the sale of commercial vehicles from leading manufacturers such as Peterbilt, International, and Ford, Rush Enterprises also provides aftermarket parts, service and repair, financing, leasing, rental, and insurance products. With a strong focus on the US commercial vehicle market, Rush Enterprises has cemented its position as a full-service provider. The company's stock price currently stands at $46.75, juxtaposed against a GF Value of $45.05, suggesting a keen alignment with its estimated fair value and setting the stage for an in-depth evaluation.
Understanding the GF Value
The GF Value is a proprietary metric that reflects the intrinsic value of a stock, tailored by GuruFocus. This valuation is grounded in a blend of historical trading multiples, an internal adjustment factor based on the company's historical performance, and projections of future business growth. The GF Value Line is a visual guide that suggests the fair trading value of a stock.
For Rush Enterprises (RUSHA, Financial), the GF Value signals that the stock is fairly valued. This assessment implies that the long-term return on Rush Enterprises' stock is likely to mirror the company's business growth rate. Therefore, investors can anticipate stability in their investment, assuming the company maintains its current trajectory.
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Financial Strength and Stability
Assessing a company's financial strength is crucial before investing. Rush Enterprises has a cash-to-debt ratio of 0.11, placing it in a less favorable position compared to many peers in the Vehicles & Parts industry. However, with an overall financial strength rating of 6 out of 10, Rush Enterprises is considered to have a fair level of financial stability.
Profitability and Growth Prospects
A consistent track record of profitability is a strong indicator of a company's investment potential. Rush Enterprises has maintained profitability for the past decade, with a revenue of $7.80 billion and an operating margin of 6.79% over the last twelve months. This performance places it above 61.83% of its industry peers, earning it a profitability rank of 8 out of 10.
Growth is a pivotal factor in valuing a company, often correlating with long-term stock performance. Rush Enterprises boasts a 3-year average annual revenue growth rate of 6.4%, outperforming 50.83% of its industry counterparts. The 3-year average EBITDA growth rate is an impressive 22%, ranking higher than 73.78% of companies in the Vehicles & Parts industry.
ROIC vs WACC: A Measure of Efficiency
An insightful method to gauge a company's profitability is by comparing its Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC). Rush Enterprises' ROIC stands at 11.69, surpassing its WACC of 6.66, which indicates efficient capital management and promising shareholder value creation.
Final Assessment
In conclusion, Rush Enterprises (RUSHA, Financial) presents itself as fairly valued in the current market. The company's fair financial condition, coupled with strong profitability and commendable growth, positions it favorably within the Vehicles & Parts industry. For those interested in a deeper dive into Rush Enterprises' financials, a comprehensive 30-Year Financials overview is available.
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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.
