Exponent Inc (EXPO, Financial) recently reported a daily loss of -22.96%, culminating in a 3-month loss of -23.01%. Despite these losses, the company boasts an Earnings Per Share (EPS) (EPS) of 1.97. This article aims to answer a crucial question: Is Exponent (EXPO) significantly undervalued? By providing a comprehensive valuation analysis, we invite our readers to delve into the financial intricacies of Exponent.
Company Overview
Exponent Inc is a leading provider of engineering and scientific consulting services, operating on a project-by-project basis. The company's team comprises scientists, physicians, engineers, and business and regulatory consultants. Exponent's operations span two segments: engineering and other scientific services, and environmental and health services. The majority of the company's revenue comes from the former segment, which includes services like biomechanics, biomedical engineering, buildings and structures, civil engineering, and construction consulting. The company generates most of its revenue from America.
At a stock price of $65.44, Exponent (EXPO, Financial) has a market cap of $3.30 billion. However, according to the GuruFocus GF Value, the fair value of the stock stands at $108.37, suggesting that the stock might be significantly undervalued.
Unraveling the GF Value
The GF Value is a proprietary measure that represents the intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on the company's past returns and growth, and future business performance estimates. The GF Value Line represents the fair value at which the stock should ideally be traded.
According to the GF Value, Exponent (EXPO, Financial) appears to be significantly undervalued. Therefore, the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength
Investing in companies with low financial strength can result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. Exponent's cash-to-debt ratio of 5.15 ranks better than 78.5% of 1609 companies in the Construction industry, suggesting a strong balance sheet.
Profitability and Growth
Companies with high profitability and consistent growth over the long term pose less risk to investors. Exponent has been profitable 10 over the past 10 years with an operating margin of 22.02%, ranking better than 92.95% of 1631 companies in the Construction industry. The 3-year average annual revenue growth of Exponent is 8.2%, ranking better than 65.64% of 1554 companies in the Construction industry.
ROIC vs WACC
A company's profitability can also be determined by comparing its return on invested capital (ROIC) to the weighted average cost of capital (WACC). For the past 12 months, Exponent's ROIC is 27.83, and its WACC is 11.22, suggesting that the company is creating value for shareholders.
Conclusion
In conclusion, Exponent (EXPO, Financial) stock appears to be significantly undervalued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 73.39% of 1323 companies in the Construction industry. To learn more about Exponent stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
