The stock of Cryo-Cell International (OTCPK:CCEL, 30-year Financials) is estimated to be modestly overvalued, 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 $9.1 per share and the market cap of $68.9 million, Cryo-Cell International stock is believed to be modestly overvalued. GF Value for Cryo-Cell International is shown in the chart below.
Because Cryo-Cell International is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 4.9% over the past five years.
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Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Cryo-Cell International has a cash-to-debt ratio of 1.67, which which ranks in the middle range of the companies in the industry of Healthcare Providers & Services. The overall financial strength of Cryo-Cell International is 4 out of 10, which indicates that the financial strength of Cryo-Cell International is poor. This is the debt and cash of Cryo-Cell International over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Cryo-Cell International has been profitable 6 over the past 10 years. Over the past twelve months, the company had a revenue of $31.1 million and earnings of $0.45 a share. Its operating margin is 22.49%, which ranks better than 93% of the companies in the industry of Healthcare Providers & Services. Overall, GuruFocus ranks the profitability of Cryo-Cell International at 7 out of 10, which indicates fair profitability. This is the revenue and net income of Cryo-Cell International over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Cryo-Cell International is 4.9%, which ranks in the middle range of the companies in the industry of Healthcare Providers & Services. The 3-year average EBITDA growth rate is 9.6%, which ranks in the middle range of the companies in the industry of Healthcare Providers & Services.
Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. 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. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Cryo-Cell International's return on invested capital is 12.63, and its cost of capital is 4.58. The historical ROIC vs WACC comparison of Cryo-Cell International is shown below:
In closing, the stock of Cryo-Cell International (OTCPK:CCEL, 30-year Financials) gives every indication of being modestly overvalued. The company's financial condition is poor and its profitability is fair. Its growth ranks in the middle range of the companies in the industry of Healthcare Providers & Services. To learn more about Cryo-Cell International stock, you can check out its 30-year Financials here.
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