Despite a daily loss of 4.95% and a 3-month loss of 48.03%, Masimo Corp (MASI, Financial) posts an Earnings Per Share (EPS) (EPS) of 2.13. This raises the question: is the stock significantly undervalued? This article provides a detailed valuation analysis to answer this question and offers insights into the company's financial health and growth prospects.
A Brief Introduction to Masimo Corp (MASI, Financial)
Masimo Corp is a leading global technology company that develops, manufactures, and markets a variety of noninvasive patient monitoring technologies, hospital automation and connectivity solutions, remote monitoring devices, and consumer health products. The healthcare business segment is the key revenue driver. Masimo Corp also has a non-healthcare segment that includes consumer audio business and related integration technologies.
Despite the company's strong business model, Masimo's current stock price of $84.17 is significantly lower than its GF Value of $351.61. This discrepancy suggests that the stock may be undervalued. The following analysis delves deeper into Masimo's value.
Understanding the GF Value of Masimo (MASI, Financial)
The GF Value is a proprietary valuation method that estimates a stock's intrinsic value. It considers three main factors: historical trading multiples, GuruFocus adjustment factor based on past performance and growth, and future business performance estimates.
According to the GF Value, Masimo (MASI, Financial) appears significantly undervalued. The stock's intrinsic value, estimated at $351.61, is significantly higher than its current trading price of $84.17. This suggests that the stock's long-term return is likely to be much higher than its business growth.
For more potential high-return opportunities, check out these high-quality companies with low capital expenditures.
Assessing Masimo's Financial Strength
Investing in companies with poor financial strength can pose a high risk of permanent capital loss. To avoid this, it's crucial to examine a company's financial strength before purchasing shares. Masimo's cash-to-debt ratio of 0.15 ranks worse than 88.81% of 840 companies in the Medical Devices & Instruments industry. However, its overall financial strength is fair, with a score of 6 out of 10.
Profitability and Growth of Masimo
Investing in profitable companies typically carries less risk. Masimo has been profitable for 10 out of the past 10 years, with an operating margin of 8.94%—better than 63.47% of 835 companies in the Medical Devices & Instruments industry. This indicates strong profitability.
Growth is a crucial factor in a company's valuation. The faster a company is growing, the more likely it is to be creating value for shareholders. Masimo's 3-year average annual revenue growth rate is 30.9%, which ranks better than 85.91% of 731 companies in the Medical Devices & Instruments industry. Its 3-year average EBITDA growth rate is 12.5%, ranking better than 55.5% of 737 companies in the industry. This indicates strong growth.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another way to assess its profitability. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Masimo's ROIC was 5.82, while its WACC was 9.83.
Conclusion
In conclusion, Masimo (MASI, Financial) appears to be significantly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 55.5% of 737 companies in the Medical Devices & Instruments industry. To learn more about Masimo stock, you can check out its 30-Year Financials here.
For more high-quality companies that may deliver above-average returns, check out the GuruFocus High Quality Low Capex Screener.
