The stock of Yandex NV (NAS:YNDX, 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 $61.36 per share and the market cap of $21.8 billion, Yandex NV stock is estimated to be fairly valued. GF Value for Yandex NV is shown in the chart below.
Because Yandex NV is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 29.6% over the past five years.
Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Thus, it is important to carefully review the financial strength of a company before deciding whether to buy its stock. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a company. Yandex NV has a cash-to-debt ratio of 2.27, which is in the middle range of the companies in Interactive Media industry. GuruFocus ranks the overall financial strength of Yandex NV at 7 out of 10, which indicates that the financial strength of Yandex NV is fair. This is the debt and cash of Yandex NV 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. Yandex NV has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $3.5 billion and earnings of $1.137 a share. Its operating margin of 7.44% in the middle range of the companies in Interactive Media industry. Overall, GuruFocus ranks Yandex NV's profitability as strong. This is the revenue and net income of Yandex NV 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 Yandex NV is 29.6%, which ranks better than 80% of the companies in Interactive Media industry. The 3-year average EBITDA growth is 27.3%, which ranks in the middle range of the companies in Interactive Media industry.
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted 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 ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Yandex NV's ROIC was 5.26, while its WACC came in at 7.73. The historical ROIC vs WACC comparison of Yandex NV is shown below:
Overall, the stock of Yandex NV (NAS:YNDX, 30-year Financials) is believed to be fairly valued. The company's financial condition is fair and its profitability is strong. Its growth ranks in the middle range of the companies in Interactive Media industry. To learn more about Yandex NV stock, you can check out its 30-year Financials here.
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