The stock of Nautilus (NYSE:NLS, 30-year Financials) gives every indication of being fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $15.13 per share and the market cap of $459 million, Nautilus stock gives every indication of being fairly valued. GF Value for Nautilus is shown in the chart below.
Because Nautilus is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 9.5% over the past five years.
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Since investing in companies with low financial strength could result in permanent capital loss, investors must carefully review a company's financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company's financial strength. Nautilus has a cash-to-debt ratio of 2.61, which ranks better than 74% of the companies in Travel & Leisure industry. Based on this, GuruFocus ranks Nautilus's financial strength as 8 out of 10, suggesting strong balance sheet. This is the debt and cash of Nautilus over the past years:
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Nautilus has been profitable 9 years over the past 10 years. During the past 12 months, the company had revenues of $552.6 million and earnings of $1.83 a share. Its operating margin of 17.82% better than 90% of the companies in Travel & Leisure industry. Overall, GuruFocus ranks Nautilus's profitability as fair. This is the revenue and net income of Nautilus over the past years:
One of the most important factors in the valuation of a company is growth. Long-term stock performance is closely correlated with growth according to GuruFocus research. Companies that grow faster create more value for shareholders, especially if that growth is profitable. The average annual revenue growth of Nautilus is 9.5%, which ranks better than 78% of the companies in Travel & Leisure industry. The 3-year average EBITDA growth is 20.7%, which ranks better than 76% of the companies in Travel & Leisure industry.
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). 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 return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Nautilus's ROIC is 70.78 while its WACC came in at 11.99. The historical ROIC vs WACC comparison of Nautilus is shown below:
Overall, the stock of Nautilus (NYSE:NLS, 30-year Financials) appears to be fairly valued. The company's financial condition is strong and its profitability is fair. Its growth ranks better than 76% of the companies in Travel & Leisure industry. To learn more about Nautilus stock, you can check out its 30-year Financials here.
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