Canada Goose Holdings Inc (GOOS, Financial) recently exhibited a daily gain of 6.63%, yet it shows a slight 3-month loss of 0.64%. With an Earnings Per Share (EPS) sitting at $0.44, investors might ponder whether the stock is significantly undervalued. This analysis delves deep into the valuation of Canada Goose Holdings, aiming to provide a clear perspective on its market standing and intrinsic value.
Company Overview
Canada Goose Holdings Inc designs, manufactures, and markets premium outerwear globally. Operating through segments like Wholesale and Direct to Consumer, it primarily serves markets in Canada, the US, Asia, and Europe. The company's current stock price is $13.99, juxtaposed against a GF Value of $22.97, suggesting that the stock might be significantly undervalued. This valuation discrepancy sets the stage for a deeper investigation into the true value of Canada Goose Holdings.
Understanding GF Value
The GF Value is a proprietary measure calculated based on historical trading multiples, an adjustment factor from GuruFocus reflecting past performance and growth, and projected future business performance. According to this metric, Canada Goose Holdings (GOOS, Financial) is currently priced well below its intrinsic value, suggesting potential for higher future returns. This undervaluation presents an intriguing opportunity for investors.
Financial Strength and Stability
Investing in companies with robust financial health is crucial to avoid potential capital loss. Canada Goose Holdings has a cash-to-debt ratio of 0.2, which is lower than many of its peers. This ratio, along with a fair financial strength rating of 5 out of 10 from GuruFocus, indicates a need for cautious evaluation by potential investors.
Profitability and Growth Prospects
Canada Goose Holdings has demonstrated strong profitability with an operating margin of 9.33%, ranking higher than 74.18% of its industry peers. The company's growth rates in revenue and EBITDA further reinforce its competitive position in the market. However, it's essential to consider both current profitability and potential for future growth when evaluating the stock.
ROIC vs. WACC
Comparing the Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) provides insight into value creation. Currently, Canada Goose's ROIC of 7.8 is below its WACC of 10.89, suggesting that the company is not generating adequate returns relative to its capital costs.
Conclusion
In summary, while Canada Goose Holdings (GOOS, Financial) appears significantly undervalued according to the GF Value, investors should consider the full spectrum of financial health, profitability, and growth prospects before making investment decisions. For those interested in a deeper financial analysis, consider exploring Canada Goose Holdings's 30-Year Financials here.
To discover other high-quality companies that may offer above-average returns, check out the GuruFocus High Quality Low Capex Screener.
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.
