LCI Industries Inc (LCII, Financial), a leading supplier of components for original equipment manufacturers of recreational vehicles and adjacent industries, has seen a daily loss of 4.68%, and a 3-month loss of 0.77%. Despite these figures, the company boasts an Earnings Per Share (EPS) (EPS) of 3.32. But is the stock fairly valued? This article aims to answer this question by providing an in-depth analysis of LCI Industries' valuation.
Company Introduction
LCI Industries Inc (LCII, Financial) is a global supplier of components for the original equipment manufacturers of recreational vehicles and adjacent industries, including buses, trailers used to haul boats, livestock, equipment, and other cargo. The company operates in two segments: the original equipment manufacturers segment and the aftermarket segment. With a stock price of $116.88 and a GF Value of $117, LCI Industries (LCII) seems to be fairly valued. But to get a comprehensive understanding, let's delve deeper into the company's value.
Understanding GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and future business performance estimates. The GF Value Line represents the fair value at which the stock should ideally be traded. If the stock price significantly deviates from the GF Value Line, it indicates that the stock may be overvalued or undervalued, thereby affecting its future returns.
Based on the GF Value, LCI Industries (LCII, Financial) appears to be fairly valued. With a market cap of $3 billion, the long-term return of its stock is likely to be close to the rate of its business growth.
Financial Strength
Before investing, it's crucial to evaluate the financial strength of the company. Examining the cash-to-debt ratio and interest coverage can provide insights into the company's financial stability. LCI Industries has a cash-to-debt ratio of 0.02, ranking lower than 95.61% of 1230 companies in the Vehicles & Parts industry. This indicates that LCI Industries' financial strength is fair.
Profitability and Growth
Consistent profitability over the long term indicates less risk for investors. LCI Industries has been profitable 10 out of the past 10 years, with a revenue of $4 billion and an EPS of $3.32 over the past twelve months. However, its operating margin of 3.48% ranks lower than 60.24% of 1265 companies in the Vehicles & Parts industry.
When it comes to growth, LCI Industries outperforms 91.21% of 1206 companies in the Vehicles & Parts industry with a 3-year average annual revenue growth of 29.3%. The 3-year average EBITDA growth rate is 34.5%, ranking better than 84.52% of 1079 companies in the same industry.
ROIC Vs WACC
Comparing the Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) provides insights into the profitability of a company. For the past 12 months, LCI Industries' ROIC has been 3.82, and its WACC has been 8.36.
Conclusion
In summary, LCI Industries (LCII, Financial) appears to be fairly valued. The company's financial condition is fair, its profitability is strong, and its growth ranks better than 84.52% of 1079 companies in the Vehicles & Parts industry. For more information about LCI Industries stock, check out its 30-Year Financials here.
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