Amidst the daily fluctuations of the stock market, Tenable Holdings Inc (TENB, Financial) has recently seen a notable daily gain of 5.33%, although it has experienced a 3-month loss of -5.44%. With a Loss Per Share of $0.68, investors may wonder if the stock is currently undervalued. This article delves into the valuation analysis of Tenable Holdings, exploring whether its current market position reflects its true worth and potential for long-term return.
Tenable Holdings Inc (TENB, Financial), a cybersecurity company founded in 2002, has been on the forefront of vulnerability management with its Nessus software. Over the years, Tenable Holdings has broadened its service offerings to include comprehensive exposure management modules, addressing needs in cloud security, compliance, active directory management, operational technology security, and advanced vulnerability analytics. Since going public in 2018, Tenable Holdings, based in Maryland, has shown significant market presence. With a current stock price of $41.73 and a Fair Value (GF Value) of $58.99, the company appears modestly undervalued, providing a potential margin of safety for investors.
Summarize GF Value
The GF Value is an exclusive metric that represents the intrinsic value of a stock, based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. Tenable Holdings (TENB, Financial) stock, with its market cap of $4.90 billion, is currently trading below the GF Value Line, suggesting it is modestly undervalued. This discrepancy indicates that the stock may offer a higher future return than its business growth alone would suggest.These companies may deliver higher future returns at reduced risk.
Assessing the financial strength of a company is crucial before investing. Tenable Holdings' financial strength score is 4 out of 10, with a cash-to-debt ratio of 1.67, which is lower than 55.99% of companies in the Software industry. This suggests that the company's financial foundation could be more robust, posing a higher risk of permanent loss for investors.
Profitability and Growth
Profitability is a key factor in investment safety. Tenable Holdings, despite its past profitability challenges, has a revenue of $770 million over the past twelve months. However, its operating margin stands at -6.74%, ranking below industry peers. The company's growth prospects are more promising, with an average annual revenue growth rate of 18.4%, outperforming 71.01% of companies in the Software industry. Such growth, if sustained, could signal a potential for value creation over time.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) provides additional insight into profitability. Tenable Holdings' ROIC of -5.45 is less than its WACC of 8.37, indicating that the company is not currently creating shareholder value relative to its capital costs. This metric will be important to monitor as the company strives to improve its financial performance.
Overall, Tenable Holdings (TENB, Financial) presents as a modestly undervalued stock. Despite its poor financial condition and profitability, the company's growth outpaces a significant portion of its industry competitors. Investors seeking to learn more about Tenable Holdings' financials and potential can access 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.