Insulet Corp (PODD, Financial) recently experienced a -1.26% loss, and a significant 3-month loss of -34.29%. Despite these figures, the company's Earnings Per Share (EPS) stands at 0.89. These statistics beg the question: is Insulet (PODD) significantly undervalued? We delve into an in-depth analysis of the company's valuation to answer this question. Let's have a closer look.
Company Overview
Insulet Corp was founded in 2000 with the aim of simplifying continuous subcutaneous insulin infusion therapy for diabetes. The company's Omnipod system, which was approved by the U.S. Food and Drug Administration in 2005, is currently used by approximately 360,000 insulin-dependent diabetics worldwide. The company's stock price currently stands at $178.92, while its GF Value, an estimation of fair value, is $366.97. This discrepancy suggests that the stock may be significantly undervalued.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line provides an overview of the stock's ideal fair trading value.
Insulet (PODD, Financial) appears to be significantly undervalued based on the GuruFocus Value calculation. With a market cap of $12.50 billion, the current price of $178.92 per share suggests that the stock is significantly undervalued. As a result, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength
Checking the financial strength of a company before investing in its stock is crucial. Insulet's cash-to-debt ratio of 0.46 is worse than 77.93% of 829 companies in the Medical Devices & Instruments industry. However, its overall financial strength is fair, with a rating of 5 out of 10.
Profitability and Growth
Investing in profitable companies carries less risk. Insulet has been profitable 5 years over the past 10 years, with an operating margin of 5.82%, better than 57.7% of 825 companies in the Medical Devices & Instruments industry. Its profitability is rated as fair by GuruFocus.
Growth is a vital factor in a company's valuation. Insulet's 3-year average revenue growth rate is better than 70.82% of 723 companies in the Medical Devices & Instruments industry. However, its 3-year average EBITDA growth rate is 8.1%, ranking worse than 51.51% of companies in the industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) can provide insights into its profitability. Insulet's ROIC stands at 5.68, while its WACC is 8.82.
Conclusion
Overall, Insulet (PODD, Financial) stock appears to be significantly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks worse than 51.51% of 728 companies in the Medical Devices & Instruments industry. To learn more about Insulet stock, you can check out its 30-Year Financials here.
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