The stock of Blue Apron Holdings (NYSE:APRN, 30-year Financials) shows every sign of being modestly undervalued, 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 $6.519 per share and the market cap of $116.5 million, Blue Apron Holdings stock shows every sign of being modestly undervalued. GF Value for Blue Apron Holdings is shown in the chart below.
Because Blue Apron Holdings is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth, which is estimated to grow 1.14% annually over the next three to 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. Blue Apron Holdings has a cash-to-debt ratio of 0.65, which ranks in the middle range of the companies in the industry of Retail - Cyclical. Based on this, GuruFocus ranks Blue Apron Holdings's financial strength as 3 out of 10, suggesting poor balance sheet. This is the debt and cash of Blue Apron Holdings over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Blue Apron Holdings has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $460.6 million and loss of $3.06 a share. Its operating margin is -8.37%, which ranks worse than 82% of the companies in the industry of Retail - Cyclical. Overall, the profitability of Blue Apron Holdings is ranked 1 out of 10, which indicates poor profitability. This is the revenue and net income of Blue Apron Holdings 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 Blue Apron Holdings is -33.4%, which ranks in the bottom 10% of the companies in the industry of Retail - Cyclical. The 3-year average EBITDA growth is 63.4%, which ranks better than 94% of the companies in the industry of Retail - Cyclical.
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, Blue Apron Holdings's ROIC is -22.02 while its WACC came in at -6.66. The historical ROIC vs WACC comparison of Blue Apron Holdings is shown below:
In conclusion, The stock of Blue Apron Holdings (NYSE:APRN, 30-year Financials) gives every indication of being modestly undervalued. The company's financial condition is poor and its profitability is poor. Its growth ranks better than 94% of the companies in the industry of Retail - Cyclical. To learn more about Blue Apron Holdings stock, you can check out its 30-year Financials here.
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