Marathon Digital Holdings Inc (MARA, Financial) recently experienced a significant daily gain of 14.76%, despite a three-month decline of -8.94%. With an Earnings Per Share (EPS) of 2.33, investors and analysts alike are keen to determine: Is the stock fairly valued? This article delves into Marathon Digital Holdings' valuation, providing a detailed analysis to answer this pressing question.
Company Overview
Marathon Digital Holdings Inc focuses on mining digital assets, operating crypto-currency mining machines and data centers primarily in the United States. With a current stock price of $22.32 and a market cap of $6.10 billion, comparing the stock's trading figures against the GF Value of $24.51 provides a foundational perspective for our valuation analysis.
Understanding GF Value
The GF Value is a proprietary measure reflecting the true intrinsic value of a stock, calculated from historical trading multiples, a GuruFocus adjustment factor based on past performance, and future business performance estimates. According to this metric, Marathon Digital Holdings (MARA, Financial) appears to be fairly valued. The GF Value suggests that the stock price will likely hover around this value, indicating that the current price aligns closely with the company's real worth.
Financial Strength and Stability
Investing in companies with robust financial health is crucial to minimize the risk of capital loss. Marathon Digital Holdings has a cash-to-debt ratio of 0.95, which, while not outstanding, still provides a measure of stability. This ratio positions it below 63.9% of its industry peers, earning a GuruFocus financial strength rating of 7 out of 10.
Profitability and Growth Prospects
Profitability is a pivotal factor in assessing a company's investment potential. Marathon Digital Holdings has maintained profitability over the past decade, with a recent annual revenue of $501.60 million. However, its operating margin of -35.29% is a concern, ranking lower than 82.12% of its industry counterparts. Despite these challenges, the company's impressive 3-year average annual revenue growth rate of 234.2% showcases its capacity for rapid expansion, albeit with profitability concerns due to a 0% EBITDA growth rate over the same period.
ROIC vs. WACC: A Critical Comparison
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) provides insights into its financial efficacy. Marathon Digital Holdings' ROIC is currently at -10.41, significantly lower than its WACC of 36.62, suggesting that the company is not generating adequate returns on its investments.
Conclusion and Investment Perspective
While Marathon Digital Holdings (MARA, Financial) is deemed fairly valued according to the GF Value, its financial stability and growth metrics present a mixed picture. Potential investors should weigh the high growth potential against the profitability challenges and subpar investment returns. For more detailed financial insights, visit Marathon Digital Holdings' 30-Year Financials.
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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.
