LiveRamp Holdings Inc (RAMP, Financial) recently reported a daily gain of 5.41%, though it has seen a 3-month loss of 6.43%. With a Loss Per Share of $0.22, investors might wonder if the stock is fairly valued. This article dives deep into the valuation of LiveRamp Holdings, providing a detailed financial analysis to determine if the current market price reflects the true intrinsic value of the company.
Company Overview
LiveRamp Holdings operates in the cloud-based software sector, specializing in data integration across various customer touchpoints. This integration helps businesses and advertisers create detailed customer profiles, enhancing their marketing strategies. The company primarily earns through a one-year subscription model, which constitutes about 80% of its revenue, with the remaining 20% coming from a marketplace for data transactions. Currently, LiveRamp Holdings trades at $34.09 per share with a market cap of $2.30 billion, closely aligning with its GF Value of $34.89, suggesting that the stock is fairly valued.
Understanding GF Value
The GF Value is a proprietary measure used to ascertain the fair market value of a stock. It incorporates historical trading multiples, a GuruFocus adjustment factor based on past performance, and projected future business performance. For LiveRamp Holdings, the GF Value suggests the stock is trading at a price that reflects its actual worth, based on these comprehensive valuation metrics.
Financial Strength and Stability
Investing in companies with robust financial health is crucial to mitigate the risk of capital loss. LiveRamp Holdings showcases a cash-to-debt ratio of 12.03, ranking well within its industry, which indicates a strong balance sheet. This financial stability is a vital indicator of the company's ability to weather economic downturns and capitalize on growth opportunities.
Profitability and Growth Prospects
While LiveRamp Holdings has demonstrated profitability over the past decade, its operating margin currently stands at -0.4%, which could be a concern. However, the company's revenue growth is robust, with a 3-year average annual revenue growth rate of 17%, outpacing many peers in the software industry. This growth trajectory suggests potential for value creation and a positive outlook for long-term investors.
Comparative Analysis: ROIC vs. WACC
A critical aspect of evaluating a company's profitability is comparing its Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC). LiveRamp Holdings has an ROIC of 7.86%, which unfortunately falls below its WACC of 11.21%. This indicates that the company is not generating adequate returns relative to its capital costs, which could impact long-term value creation.
Conclusion
In summary, LiveRamp Holdings appears to be fairly valued at its current market price, reflecting its financial health and growth prospects accurately. Investors considering this stock should weigh the strong financial position against the challenges in profitability and capital returns. For more detailed financial analysis and data, visit LiveRamp Holdings'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.
