Riot Platforms Inc (RIOT, Financial) has experienced a significant daily gain of 9.76%, yet it faces a 3-month loss of -22.04%. With a Loss Per Share of $1.79, investors are compelled to question the stock's valuation: is Riot Platforms fairly valued? The following analysis delves into Riot Platforms' valuation, providing investors with a clearer picture of its market position.
Company Introduction
Riot Platforms Inc is a vertically integrated Bitcoin mining entity, instrumental in developing, supporting, and operating blockchain technologies. As a decentralized and encrypted ledger, blockchain technology offers a secure and efficient method for recording transactions and information. Riot Platforms operates primarily in Bitcoin Mining, Data Center Hosting, and Engineering, with the former being its most lucrative segment. With a current stock price of $10.68 and a market cap of $2.20 billion, juxtaposed against a GF Value of $10.97, a close examination of its intrinsic value is warranted.
Summarize GF Value
The GF Value is a unique measure that reflects the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides a visual representation of the stock's fair value. Riot Platforms (RIOT, Financial) is deemed fairly valued by the GF Value, suggesting that its stock price is in alignment with its intrinsic worth. Hence, the long-term return of its stock is likely to mirror the rate of its business growth.
Financial Strength
Investing in companies with solid financial strength mitigates the risk of capital loss. Riot Platforms boasts a cash-to-debt ratio of 20.18, surpassing 69.59% of peers in the Capital Markets industry. Its financial strength is impressive, with a GuruFocus ranking of 8 out of 10, suggesting a robust financial foundation.
Profitability and Growth
Profitability is a critical factor for investment safety. Riot Platforms has struggled with profitability, evidenced by its operating margin of -92.31%, which is lower than that of 87.81% of its industry counterparts. However, the company has shown impressive revenue growth, with a 3-year average annual revenue growth of 74.6%, ranking higher than 91.88% of companies in the Capital Markets industry.
ROIC vs WACC
An insightful way to gauge profitability is by comparing the Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC). Riot Platforms' ROIC of -24.7 against a WACC of 35.37 suggests that the company is currently not generating adequate returns on its investments.
Conclusion
In summary, Riot Platforms (RIOT, Financial) appears to be fairly valued in the market. It boasts strong financial health but faces challenges in profitability and growth. For a more detailed look at Riot Platforms' financials and to better understand its stock potential, investors can review 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.
