Is Matrix Service Co (MTRX) Fairly Valued? An In-Depth Valuation Analysis
Matrix Service Co (NASDAQ:MTRX), an engineering and construction provider for large industrial projects, has recently witnessed a daily gain of 23.16%, and a 3-month gain of 33.5%. However, with a Loss Per Share of 1.43, the question arises: Is the stock fairly valued? This article aims to provide a comprehensive valuation analysis to answer this question.
Company Introduction
Matrix Service Co primarily serves the oil and gas, power, petrochemical, industrial, mining, and minerals markets, offering engineering, fabrication, construction, and maintenance services. With a current share price of $7.87 and a market cap of $212.90 million, the company's GF Valuethe estimation of fair valueis $7.5, suggesting that the stock is fairly valued.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should be traded.
According to GuruFocus Value calculation, Matrix Service Co stock is estimated to be fairly valued. This suggests that the long-term return of its stock is likely to be close to the rate of its business growth.
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Financial Strength
Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Matrix Service Co has a cash-to-debt ratio of 1.17, better than 61.89% of 1598 companies in the Construction industry. GuruFocus ranks the overall financial strength of Matrix Service Co at 6 out of 10, indicating fair financial strength.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors. Matrix Service Co has been profitable 5 over the past 10 years. Its operating margin is -6.63%, ranking worse than 85.82% of 1601 companies in the Construction industry. Overall, the profitability of Matrix Service Co is ranked 5 out of 10, indicating fair profitability.
The growth of a company is a crucial factor in its valuation. The 3-year average annual revenue growth of Matrix Service Co is -19.8%, ranking worse than 88.46% of 1543 companies in the Construction industry. The 3-year average EBITDA growth rate is 0%, ranking worse than 0% of 1316 companies in the Construction industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted average cost of capital (WACC) is another way to assess its profitability. For the past 12 months, Matrix Service Co's ROIC is -17.9, and its WACC is 12.57.
Conclusion
In conclusion, Matrix Service Co (NASDAQ:MTRX) is estimated to be fairly valued. The company's financial condition and profitability are fair, but its growth ranks worse than 0% of 1316 companies in the Construction industry. To learn more about Matrix Service Co stock, check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
