The stock of Cellectis SA (NAS:CLLS, 30-year Financials) gives every indication of being possible value trap, 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 $14.54 per share and the market cap of $637.4 million, Cellectis SA stock shows every sign of being possible value trap. GF Value for Cellectis SA is shown in the chart below.
The reason we think that Cellectis SA stock might be a value trap is because its Piotroski F-score is only 0, out of the total of 9. Such a low Piotroski F-score indicates the company is getting worse in multiple aspects in the areas of profitability, funding and efficiency. In this case, investors should look beyond the low valuation of the company and make sure it has no long-term risks. To learn more about how the Piotroski F-score measures the business trend of a company, please go here. Furthermore, Cellectis SA has an Altman Z-score of 0.32, which indicates that the financial condition of the company is in the distressed zone and implies a higher risk of bankruptcy. An Altman Z-score of above 2.99 would be better, indicating safe financial conditions. To learn more about how the Z-score measures the financial risk of the company, please go here.
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. Cellectis SA has a cash-to-debt ratio of 2.18, which is worse than 74% of the companies in Biotechnology industry. The overall financial strength of Cellectis SA is 4 out of 10, which indicates that the financial strength of Cellectis SA is poor. This is the debt and cash of Cellectis SA 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. Cellectis SA has been profitable 1 years over the past 10 years. During the past 12 months, the company had revenues of $48.6 million and loss of $2.7 a share. Its operating margin of -251.11% in the middle range of the companies in Biotechnology industry. Overall, GuruFocus ranks Cellectis SA's profitability as poor. This is the revenue and net income of Cellectis SA 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 Cellectis SA is 33.9%, which ranks better than 82% of the companies in Biotechnology industry. The 3-year average EBITDA growth rate is 11.9%, which ranks in the middle range of the companies in Biotechnology industry.
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, Cellectis SA's ROIC is -79.43 while its WACC came in at 10.32.
Overall, the stock of Cellectis SA (NAS:CLLS, 30-year Financials) shows every sign of being possible value trap. The company's financial condition is poor and its profitability is poor. Its growth ranks in the middle range of the companies in Biotechnology industry. To learn more about Cellectis SA stock, you can check out its 30-year Financials here.
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