The stock of iClick Interactive Asia Group (NAS:ICLK, 30-year Financials) appears to be significantly 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 $11.74 per share and the market cap of $1.1 billion, iClick Interactive Asia Group stock appears to be significantly overvalued. GF Value for iClick Interactive Asia Group is shown in the chart below.
Because iClick Interactive Asia Group is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 20.4% over the past three years and is estimated to grow 28.11% annually over the next three to five years.
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. iClick Interactive Asia Group has a cash-to-debt ratio of 1.59, which which ranks in the middle range of the companies in the industry of Media - Diversified. The overall financial strength of iClick Interactive Asia Group is 5 out of 10, which indicates that the financial strength of iClick Interactive Asia Group is fair. This is the debt and cash of iClick Interactive Asia Group 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. iClick Interactive Asia Group has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $254.7 million and loss of $0.086 a share. Its operating margin is -0.21%, which ranks in the middle range of the companies in the industry of Media - Diversified. Overall, GuruFocus ranks the profitability of iClick Interactive Asia Group at 1 out of 10, which indicates poor profitability. This is the revenue and net income of iClick Interactive Asia Group 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 iClick Interactive Asia Group is 20.4%, which ranks better than 87% of the companies in the industry of Media - Diversified. The 3-year average EBITDA growth rate is 58%, which ranks better than 92% of the companies in the industry of Media - Diversified.
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, iClick Interactive Asia Group's return on invested capital is -0.25, and its cost of capital is 5.05. The historical ROIC vs WACC comparison of iClick Interactive Asia Group is shown below:
To conclude, The stock of iClick Interactive Asia Group (NAS:ICLK, 30-year Financials) gives every indication of being significantly overvalued. The company's financial condition is fair and its profitability is poor. Its growth ranks better than 92% of the companies in the industry of Media - Diversified. To learn more about iClick Interactive Asia Group stock, you can check out its 30-year Financials here.
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