The stock of Corcept Therapeutics (NAS:CORT, 30-year Financials) gives every indication of being 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 $22.45 per share and the market cap of $2.6 billion, Corcept Therapeutics stock appears to be modestly overvalued. GF Value for Corcept Therapeutics is shown in the chart below.
Because Corcept Therapeutics is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 30.6% over the past three years and is estimated to grow 16.00% annually over the next three to five years.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Corcept Therapeutics has a cash-to-debt ratio of 172.75, which is better than 78% of the companies in Biotechnology industry. The overall financial strength of Corcept Therapeutics is 7 out of 10, which indicates that the financial strength of Corcept Therapeutics is fair. This is the debt and cash of Corcept Therapeutics 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. Corcept Therapeutics has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of $353.9 million and earnings of $0.85 a share. Its operating margin is 36.23%, which ranks better than 94% of the companies in Biotechnology industry. Overall, the profitability of Corcept Therapeutics is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Corcept Therapeutics 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 performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Corcept Therapeutics is 30.6%, which ranks better than 80% of the companies in Biotechnology industry. The 3-year average EBITDA growth rate is 35.2%, which ranks better than 78% of the companies in Biotechnology 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, Corcept Therapeutics's ROIC was 107.29, while its WACC came in at 4.88. The historical ROIC vs WACC comparison of Corcept Therapeutics is shown below:
Overall, Corcept Therapeutics (NAS:CORT, 30-year Financials) stock is estimated to be modestly overvalued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 78% of the companies in Biotechnology industry. To learn more about Corcept Therapeutics stock, you can check out its 30-year Financials here.
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