Insulet Corp (PODD, Financial) is currently experiencing a daily gain of 2.99%, despite a 3-month loss of 46.28%. With an Earnings Per Share (EPS) of 0.89, the question arises: is the stock significantly undervalued? This article aims to provide an in-depth valuation analysis of Insulet (PODD). We encourage you to delve into the following analysis to understand the company's true market value.
Company Introduction
Founded in 2000, Insulet Corp's mission is to simplify continuous subcutaneous insulin infusion therapy for diabetes. The result was the Omnipod system, a small disposable insulin infusion device that can be controlled via a smartphone to manage dosage. Since its approval by the U.S. Food and Drug Administration in 2005, it's been adopted by approximately 360,000 insulin-dependent diabetics worldwide. Despite the company's impressive track record, its current stock price of $159.29 is significantly lower than the GF Value of $372.65, suggesting that the stock may be undervalued.
Understanding GF Value
The GF Value is a proprietary measure that represents the intrinsic value of a stock. It is calculated based on historical multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line gives an overview of the fair value that the stock should be traded at.
Insulet (PODD, Financial) is estimated to be significantly undervalued according to GuruFocus' valuation method. 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. At its current price of $159.29 per share, Insulet stock is estimated to be significantly undervalued. As a result, the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid this, an investor must review a company's financial strength before deciding to purchase shares. Insulet's cash-to-debt ratio of 0.46 ranks worse than 77.17% of 841 companies in the Medical Devices & Instruments industry. The overall financial strength of Insulet is 5 out of 10, which indicates that the financial strength of Insulet is fair.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Insulet has been profitable 5 over the past 10 years. Its operating margin is 5.82%, which ranks better than 57.42% of 836 companies in the Medical Devices & Instruments industry. Overall, the profitability of Insulet is ranked 6 out of 10, which indicates fair profitability.
Growth is a crucial factor in the valuation of a company. Insulet's 3-year average revenue growth rate is better than 70.59% of 731 companies in the Medical Devices & Instruments industry. However, Insulet's 3-year average EBITDA growth rate is 8.1%, which ranks worse than 51.63% of 738 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. Over the past 12 months, Insulet's ROIC was 5.68, while its WACC came in at 9.43.
Conclusion
In conclusion, the stock of Insulet (PODD, Financial) is estimated to be significantly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks worse than 51.63% of 738 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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