The recent market activities of V2X Inc (VVX, Financial) have raised eyebrows among investors. With a daily loss of 20.82% and a 3-month loss of 23.24%, coupled with a reported Loss Per Share of 1.55, the question arises: Is V2X (VVX) fairly valued? This article presents a comprehensive analysis of V2X's current market position and intrinsic value, using the proprietary GF Value metric. We invite you to read on for an in-depth understanding of V2X's valuation.
Company Overview
V2X Inc is a U.S.-based company offering services to the U.S. government. It operates as one segment, providing facility and logistics services, information technology mission support, and engineering and digital integration services. The company's information technology and network communications capabilities include communications systems operations and maintenance, management and service support, systems installation and activation, system-of-systems engineering, and software development. The facility and logistics services encompass airfield management, ammunition management, civil engineering, communications, emergency services, life support activities, public works, security, transportation operations, and more.
As of November 06, 2023, V2X (VVX, Financial) is trading at $40.73 per share, with a market cap of $1.30 billion. The GF Value, a measure of the stock's intrinsic value, is calculated at $39.77, suggesting that V2X is fairly valued.
Understanding the GF Value
The GF Value is a proprietary metric that represents the intrinsic value of a stock. It's calculated based on historical trading multiples, a GuruFocus adjustment factor derived from the company's past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the stock's fair trading value. If the stock price significantly deviates from the GF Value Line, it indicates that the stock may be overvalued or undervalued, which can influence its future returns.
According to the GF Value calculation, V2X (VVX, Financial) is fairly valued. The stock price of $40.73 per share aligns closely with the GF Value of $39.77, suggesting that V2X's long-term stock return is likely to be close to the rate of its business growth.
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Evaluating V2X's Financial Strength
Investing in companies with poor financial strength can increase the risk of permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy its stock. A good starting point is to look at the cash-to-debt ratio and interest coverage. V2X's cash-to-debt ratio of 0.06 is worse than 89.8% of 294 companies in the Aerospace & Defense industry, indicating that V2X's financial strength is poor.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. V2X has been profitable 9 out of the past 10 years. Over the past twelve months, the company had a revenue of $3.90 billion and a Loss Per Share of $1.55. Its operating margin is 2.6%, ranking worse than 61.49% of 296 companies in the Aerospace & Defense industry. Overall, V2X's profitability is fair.
Growth is an essential factor in a company's valuation. Growth is closely correlated with the long-term performance of a company's stock. V2X's 3-year average revenue growth rate is better than 57.36% of 265 companies in the Aerospace & Defense industry. V2X's 3-year average EBITDA growth rate is 5.2%, ranking better than 60.17% of 231 companies in the Aerospace & Defense industry.
Return on Invested Capital (ROIC) vs. Weighted Average Cost of Capital (WACC)
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) is another way to evaluate 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, V2X's ROIC was 4.68, while its WACC came in at 8.75.
Conclusion
In conclusion, V2X (VVX, Financial) is estimated to be fairly valued. The company's financial condition is poor, but its profitability is fair, and its growth ranks better than 60.17% of 231 companies in the Aerospace & Defense industry. For more detailed financial data on V2X, 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.
