National Research Corp (NRC, Financial) recorded a daily gain of 1.83%, with a 3-month loss of -7.01% and an Earnings Per Share (EPS) of 1.17 as of September 07, 2023. This raises the question: is National Research fairly valued? Our comprehensive valuation analysis will provide a clear answer to this question. Read on for an in-depth exploration of the company's value.
Introduction to National Research Corp (NRC, Financial)
National Research Corp is a leading provider of analytics and insights that facilitate the measurement and improvement of the patient and employee experience. The company also increases patient engagement and customer loyalty for healthcare providers, payers, and other healthcare organizations. Its solutions are offered at an enterprise level through the Voice of the Customer platform, The Governance Institute, and legacy Experience solutions. National Research operates primarily in the United States and Canada.
Currently, National Research (NRC, Financial) trades at $43.3 per share, with a market cap of $1.10 billion. The GF Value, an estimation of fair value, is $45.17, indicating that the stock is fairly valued. Let's delve deeper into the company's value.
Understanding the GF Value of National Research
The GF Value represents the current intrinsic value of a stock, derived from our proprietary method. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded. It is calculated based on three factors:
- Historical multiples (PE Ratio, PS Ratio, PB Ratio, and Price-to-Free-Cash-Flow) that the stock has traded at.
- GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of the business performance.
Our analysis suggests that the stock of National Research appears to be fairly valued. The GF Value estimates the stock's fair value based on historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. If the stock's share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. Conversely, if the stock's share price is significantly below the GF Value Line, the stock may be undervalued and have high future returns.
Given that National Research is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
Financial Strength of National Research
Investing in companies with low financial strength could result in permanent capital loss. Therefore, investors must carefully review a company's financial strength before deciding whether to buy shares. National Research has a cash-to-debt ratio of 1.13, which ranks better than 56.97% of 653 companies in the Healthcare Providers & Services industry. Based on this, GuruFocus ranks National Research's financial strength as 8 out of 10, suggesting a strong balance sheet.
Profitability and Growth of National Research
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. National Research has been profitable 10 over the past 10 years. Over the past twelve months, the company had revenue of $148.50 million and Earnings Per Share (EPS) of $1.17. Its operating margin is 28.11%, which ranks better than 96.14% of 647 companies in the Healthcare Providers & Services industry. Overall, the profitability of National Research is ranked 9 out of 10, indicating strong profitability.
Growth is probably the most important factor in the valuation of a company. The 3-year average annual revenue growth of National Research is 6.6%, which ranks worse than 55.87% of 571 companies in the Healthcare Providers & Services industry. The 3-year average EBITDA growth rate is 1.6%, which ranks worse than 63.93% of 524 companies in the Healthcare Providers & Services industry.
ROIC vs 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. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, National Research's return on invested capital is 28.78, and its cost of capital is 5.98.
Conclusion
In conclusion, the stock of National Research (NRC, Financial) appears to be fairly valued. The company's financial condition is strong, and its profitability is robust. However, its growth ranks worse than 63.93% of 524 companies in the Healthcare Providers & Services industry. To learn more about National Research stock, you can check out its 30-Year Financials here.
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