Despite a daily loss of 18.04% and a 3-month loss of 24.45%, Tenable Holdings Inc (TENB, Financial) has grabbed the attention of value investors. With a Loss Per Share of 0.72, the question arises: Is the stock significantly undervalued? This article aims to answer this question through a detailed valuation analysis. Read on to gain insights into Tenable Holdings' intrinsic value and financial standing.
Company Introduction
Tenable Holdings Inc is a leading provider of exposure management solutions. Its diverse product range includes Tenable.io, Tenable.io Web Application Scanning, Tenable.cs, Tenable.ad, Tenable.asm, Tenable Lumin Exposure View, Tenable.ot, and Tenable.sc. The company operates in the Americas, Europe, the Middle East, Africa, and Asia Pacific, with the majority of its revenue derived from the Americas. Despite a current stock price of $34.4, Tenable Holdings' intrinsic value, as estimated by the GF Value, stands at $60.98, indicating a potential undervaluation.
Understanding GF Value
The GF Value is a unique measure of a stock's intrinsic value. It is computed based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally trade. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
With a market cap of $4 billion and a stock price of $34.4 per share, Tenable Holdings (TENB, Financial) appears to be significantly undervalued according to the GF Value calculation. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, investors must thoroughly review a company's financial strength before purchasing shares. Tenable Holdings has a cash-to-debt ratio of 1.55, which ranks worse than 58.77% of 2738 companies in the Software industry. The overall financial strength of Tenable Holdings is 5 out of 10, indicating fair financial health.
Profitability and Growth
Investing in profitable companies carries less risk, especially those that have demonstrated consistent profitability over the long term. Tenable Holdings has been profitable 0 years over the past 10 years. With revenues of $743.40 million and a Loss Per Share of $0.72 in the past 12 months, its operating margin of -7.66% is worse than 66.23% of 2766 companies in the Software industry. Overall, GuruFocus ranks Tenable Holdings's profitability as poor.
Growth is a crucial factor in a company's valuation. Tenable Holdings's 3-year average revenue growth rate is better than 71.13% of 2397 companies in the Software industry. Its 3-year average EBITDA growth rate is 23.2%, ranking better than 71.41% of 1994 companies in the Software 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. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Tenable Holdings's ROIC was -6.02, while its WACC came in at 8.79.
Conclusion
In conclusion, the stock of Tenable Holdings (TENB, Financial) is estimated to be significantly undervalued. The company's financial condition is fair, and its profitability is poor. Its growth ranks better than 71.41% of 1994 companies in the Software industry. To learn more about Tenable Holdings stock, you can check out its 30-Year Financials here.
To find out the high quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
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.
