Inter Parfums (IPAR): A Fair Valuation or a Hidden Gem?
Inter Parfums Inc (NASDAQ:IPAR) experienced a daily gain of 3.93%, and a three-month gain of 6.1%, with an Earnings Per Share (EPS) (EPS) of 4.59. But is the stock fairly valued? This comprehensive analysis will delve into the valuation of Inter Parfums (NASDAQ:IPAR) to answer this question. Keep reading to discover more about the company's value and financial health.
Company Introduction
Inter Parfums Inc operates in the fragrance business, manufacturing, marketing, and distributing fragrances and fragrance-related products. The company's portfolio includes notable brands such as JIMMY CHOO, bebe, Paul Smith, Abercrombie and Fitch, COACH, and more. Inter Parfums operates in two segments: European-based operations and United States operations, selling its products to department stores, perfumeries, specialty stores, and domestic and international wholesalers and distributors. The company's current stock price is $144.82, with a GF Value of $137.01, indicating that the stock could be fairly valued.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. The GF Value Line provides an overview of the fair value at which the stock should be traded. This value is calculated based on historical multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. If the stock price is significantly above the GF Value Line, it is considered overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Inter Parfums (NASDAQ:IPAR) appears to be fairly valued based on the GuruFocus Value calculation. With a market cap of $4.60 billion, the company's stock price aligns closely with its GF Value. As a result, the long-term return of its stock is likely to be close to the rate of its business growth.
Financial Strength
Investing in companies with strong financial strength reduces the risk of permanent loss. A company's cash-to-debt ratio and interest coverage are good indicators of financial strength. Inter Parfums boasts a cash-to-debt ratio of 0.92, better than 61.97% of companies in the Consumer Packaged Goods industry. The overall financial strength of Inter Parfums is 8 out of 10, indicating a strong financial position.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, poses less risk. Inter Parfums has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $1.20 billion and an EPS of $4.59. Its operating margin is 19.86%, ranking better than 92.36% of companies in the Consumer Packaged Goods industry. Overall, GuruFocus ranks the profitability of Inter Parfums at 9 out of 10, indicating strong profitability.
Growth is a critical factor in the valuation of a company. If a company's business is growing, it usually creates value for its shareholders, especially if the growth is profitable. Inter Parfums's 3-year average revenue growth rate is better than 73.76% of companies in the Consumer Packaged Goods industry. The company's 3-year average EBITDA growth rate is 23.5%, ranking better than 74.26% of companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) is another method of determining its profitability. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Inter Parfums's ROIC is 24.45, and its WACC is 12.54.
Conclusion
In conclusion, Inter Parfums (NASDAQ:IPAR) stock appears to be fairly valued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 74.26% of companies in the Consumer Packaged Goods industry. To learn more about Inter Parfums stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
