Ekso Bionics Holdings Stock Appears To Be Modestly Overvalued
- By GF Value
The stock of Ekso Bionics Holdings (NAS:EKSO, 30-year Financials) is estimated to be modestly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $5.67 per share and the market cap of $71.8 million, Ekso Bionics Holdings stock appears to be modestly overvalued. GF Value for Ekso Bionics Holdings is shown in the chart below.
Because Ekso Bionics Holdings is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which is estimated to grow 0.61% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Ekso Bionics Holdings has a cash-to-debt ratio of 13.31, which which ranks better than 69% of the companies in the industry of Medical Devices & Instruments. The overall financial strength of Ekso Bionics Holdings is 4 out of 10, which indicates that the financial strength of Ekso Bionics Holdings is poor. This is the debt and cash of Ekso Bionics Holdings over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Ekso Bionics Holdings has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $9.3 million and loss of $2.69 a share. Its operating margin is -120.28%, which ranks worse than 80% of the companies in the industry of Medical Devices & Instruments. Overall, GuruFocus ranks the profitability of Ekso Bionics Holdings at 1 out of 10, which indicates poor profitability. This is the revenue and net income of Ekso Bionics Holdings over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Ekso Bionics Holdings is -26.3%, which ranks worse than 85% of the companies in the industry of Medical Devices & Instruments. The 3-year average EBITDA growth rate is 42.8%, which ranks better than 80% of the companies in the industry of Medical Devices & Instruments.
Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Ekso Bionics Holdings's return on invested capital is -198.03, and its cost of capital is 15.78. The historical ROIC vs WACC comparison of Ekso Bionics Holdings is shown below:
Overall, The stock of Ekso Bionics Holdings (NAS:EKSO, 30-year Financials) shows every sign of being modestly overvalued. The company's financial condition is poor and its profitability is poor. Its growth ranks better than 80% of the companies in the industry of Medical Devices & Instruments. To learn more about Ekso Bionics Holdings stock, you can check out its 30-year Financials here.
To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener.
This article first appeared on GuruFocus.
