Navigator Holdings Ltd (NVGS, Financial) recently showcased a notable daily gain of 6.32%, contributing to a three-month gain of 16.55%. With an Earnings Per Share (EPS) of 1.17, investors might wonder if the stock is modestly overvalued. This article delves into the intrinsic valuation of Navigator Holdings, providing a clear perspective on its current market standing and future prospects.
Company Overview
Navigator Holdings Ltd owns and operates a fleet of handysize liquefied gas carriers and has a stake in the Ethylene Export Terminal through a joint venture. Despite a robust operational profile, the stock's current price of $17.82 suggests a potential overvaluation against the GF Value of $15.09, indicating that the market might be pricing Navigator Holdings above its intrinsic value. This valuation presents a pivotal discussion point for potential investors.
Understanding GF Value
The GF Value is a proprietary measure calculated based on historical trading multiples, an adjustment factor from past performance, and future business performance estimates. For Navigator Holdings, the GF Value suggests the stock is modestly overvalued. This assessment aligns with the stock's current market cap of $1.30 billion, reflecting a premium above the GF Value.
Financial Strength and Risk Assessment
Investing in companies with robust financial strength reduces the risk of capital loss. Navigator Holdings, with a cash-to-debt ratio of 0.2, shows a weaker position than 69.37% of its industry peers. This metric, coupled with a financial strength rating of 5 out of 10, suggests that the company's financial health is fair but not without risks.
Profitability and Growth Metrics
Navigator Holdings has demonstrated consistent profitability with an operating margin of 24.93%, outperforming 76.13% of its competitors. However, its growth metrics reveal a mixed picture. The 3-year average annual revenue growth rate of 7.5% is below industry median, and the EBITDA growth rate is also not particularly strong, ranking worse than half of the companies in the Oil & Gas sector.
ROIC vs. WACC: Value Creation Analysis
An effective way to gauge value creation is by comparing the Return on Invested Capital (ROIC) against the Weighted Average Cost of Capital (WACC). Navigator Holdings has an ROIC of 6.11, slightly above its WACC of 5.97, indicating marginal value creation. This close margin calls for cautious optimism regarding long-term profitability.
Conclusion
While Navigator Holdings (NVGS, Financial) appears modestly overvalued based on GF Value, the company maintains fair financial health and profitability. However, its growth and value creation metrics suggest a cautious approach might be warranted. For more detailed financial insights, visit the company's 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.
