Advertisement
U.S. markets open in 1 hour 27 minutes
  • S&P Futures

    5,304.50
    -3.75 (-0.07%)
     
  • Dow Futures

    40,139.00
    -5.00 (-0.01%)
     
  • Nasdaq Futures

    18,485.25
    -18.50 (-0.10%)
     
  • Russell 2000 Futures

    2,140.40
    +2.00 (+0.09%)
     
  • Crude Oil

    82.41
    +1.06 (+1.30%)
     
  • Gold

    2,229.80
    +17.10 (+0.77%)
     
  • Silver

    24.67
    -0.08 (-0.31%)
     
  • EUR/USD

    1.0789
    -0.0041 (-0.38%)
     
  • 10-Yr Bond

    4.1960
    0.0000 (0.00%)
     
  • Vix

    13.04
    +0.26 (+2.03%)
     
  • GBP/USD

    1.2614
    -0.0025 (-0.19%)
     
  • USD/JPY

    151.3580
    +0.1120 (+0.07%)
     
  • Bitcoin USD

    70,629.94
    +389.85 (+0.56%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.37
    +20.39 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

Malibu Boats Stock Is Believed To Be Significantly Undervalued

- By GF Value

The stock of Malibu Boats (NAS:MBUU, 30-year Financials) shows every sign of being significantly undervalued, 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 $77.11 per share and the market cap of $1.6 billion, Malibu Boats stock gives every indication of being significantly undervalued. GF Value for Malibu Boats is shown in the chart below.


Malibu Boats Stock Is Believed To Be Significantly Undervalued
Malibu Boats Stock Is Believed To Be Significantly Undervalued

Because Malibu Boats is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth, which averaged 25.9% over the past five years.

Link: These companies may deliever higher future returns at reduced risk.

Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Thus, it is important to carefully review the financial strength of a company before deciding whether to buy its stock. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a company. Malibu Boats has a cash-to-debt ratio of 0.14, which is worse than 82% of the companies in Vehicles & Parts industry. GuruFocus ranks the overall financial strength of Malibu Boats at 6 out of 10, which indicates that the financial strength of Malibu Boats is fair. This is the debt and cash of Malibu Boats over the past years:

Malibu Boats Stock Is Believed To Be Significantly Undervalued
Malibu Boats Stock Is Believed To Be Significantly Undervalued

Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Malibu Boats has been profitable 6 over the past 10 years. Over the past twelve months, the company had a revenue of $677.6 million and earnings of $3.4 a share. Its operating margin is 14.30%, which ranks better than 90% of the companies in Vehicles & Parts industry. Overall, the profitability of Malibu Boats is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Malibu Boats over the past years:

Malibu Boats Stock Is Believed To Be Significantly Undervalued
Malibu Boats Stock Is Believed To Be Significantly Undervalued

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 stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Malibu Boats is 25.9%, which ranks better than 95% of the companies in Vehicles & Parts industry. The 3-year average EBITDA growth rate is 17%, which ranks better than 84% of the companies in Vehicles & Parts industry.

Another way to look at the profitability of a company is to compare its return on invested capital and the weighted 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. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, Malibu Boats's return on invested capital is 17.88, and its cost of capital is 12.45. The historical ROIC vs WACC comparison of Malibu Boats is shown below:

Malibu Boats Stock Is Believed To Be Significantly Undervalued
Malibu Boats Stock Is Believed To Be Significantly Undervalued

In conclusion, The stock of Malibu Boats (NAS:MBUU, 30-year Financials) is estimated to be significantly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 84% of the companies in Vehicles & Parts industry. To learn more about Malibu Boats 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.

Advertisement