With a daily gain of 10.09%, a 3-month loss of -8%, and Earnings Per Share (EPS) of 0.05, The Marygold Companies Inc (MGLD, Financial) seems to present an interesting investment case. This article aims to answer the question: Is The Marygold (MGLD) significantly undervalued? The following analysis will provide a detailed valuation of the company.
Company Introduction
The Marygold Companies Inc is engaged in identifying and acquiring established, profitable, undervalued companies in diverse sectors. It manages its portfolio to facilitate growth and add value for all stakeholders. As of August 25, 2023, the company's stock price stands at $1.2, while its GF Value, an estimation of fair value, is $1.65, indicating that the stock may be significantly undervalued.
Understanding GF Value
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. It is calculated based on historical multiples that the stock has traded at, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance. The GF Value Line on our summary page gives an overview of the fair value at which the stock should be traded.
According to GuruFocus Value calculation, The Marygold (MGLD, Financial) appears to be significantly undervalued. The stock is currently priced at $1.2 per share with a market cap of $47.30 million, which is significantly below the GF Value Line. Therefore, the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Thus, it is essential to review a company's financial strength before deciding to buy shares. The Marygold has a cash-to-debt ratio of 12.24, ranking better than 50.71% of 1469 companies in the Asset Management industry. Based on this, GuruFocus ranks The Marygold's financial strength as 10 out of 10, suggesting a strong balance sheet.
Profitability and Growth
Investing in profitable companies carries less risk. The Marygold has been profitable 9 years over the past 10 years. It has an operating margin of 7.54%, which is worse than 55.87% of 596 companies in the Asset Management industry. However, The Marygold's 3-year average revenue growth rate is better than 61.03% of 893 companies in the same industry. Its 3-year average EBITDA growth rate is 29.5%, ranking better than 67.45% of 470 companies in the Asset Management industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can also evaluate a company's profitability. The Marygold's ROIC is 15.23, while its WACC is 6.91. If the ROIC exceeds the WACC, the company is likely creating value for its shareholders.
Conclusion
Overall, The Marygold (MGLD, Financial) stock appears to be significantly undervalued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 67.45% of 470 companies in the Asset Management industry. To learn more about The Marygold stock, you can check out its 30-Year Financials here.
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