Trupanion Inc (TRUP, Financial) has recently experienced a daily loss of 6.61% and a 3-month loss of 13.39%, with a reported Loss Per Share of $1.26. These figures raise a critical question: is Trupanion significantly undervalued? The following analysis, grounded in the GF Value and other financial metrics, aims to uncover the true valuation of Trupanion, inviting readers to delve into the intricate world of stock valuation.
Company Introduction
Trupanion Inc is a notable player in the United States insurance market, specializing in products for pets, particularly cats and dogs. Operating under two business segments, the subscription business focuses on direct-to-consumer products, while the other segment includes business-to-business offerings and various software solutions. With a market cap of $1 billion and sales reaching $1.10 billion, Trupanion's financial performance is a subject of interest for investors, especially when considering its current stock price of $25.72 against the GF Value of $97.88, suggesting a potential undervaluation.
Summarize GF Value
The GF Value is an exclusive measure that estimates the intrinsic value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance predictions. Trupanion (TRUP, Financial) is currently positioned as significantly undervalued according to the GF Value, suggesting a promising outlook for long-term returns, potentially exceeding the company's growth rate. At a price of $25.72 per share, Trupanion stands well below the GF Value Line, indicating a favorable investment opportunity for value-seeking investors.
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Financial Strength
Evaluating a company's financial strength is crucial before investing. Trupanion's cash-to-debt ratio of 2.06 positions it better than 50.21% of its industry peers. With a financial strength rating of 6 out of 10, Trupanion's fiscal health is deemed fair, which is reassuring for potential investors.
Profitability and Growth
Profitable companies are generally considered safer investments, particularly those with consistent profitability. Despite Trupanion's 10-year history of 0 profitability, its revenue of $1.10 billion over the past twelve months is notable. However, the company's operating margin of -4.73% is a concern, ranking lower than 71.43% of its industry counterparts, resulting in a profitability rank of 4 out of 10. In terms of growth, Trupanion's 3-year average annual revenue growth rate of 26.1% is impressive, outpacing 91.85% of the insurance industry.
ROIC vs. WACC
The comparison between Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) is a measure of profitability and value creation. Trupanion's ROIC of -10.23 versus a WACC of 14.4 indicates that the company is currently not creating value for shareholders, a critical aspect for investors to consider.
Conclusion
Overall, Trupanion appears to be significantly undervalued, with fair financial health but poor profitability. Its growth rate outshines many in the insurance industry, yet its value creation is currently lacking. For a more in-depth understanding of Trupanion's financials, interested parties can explore the 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.
