Unveiling Albany International (AIN)'s Value: Is It Really Priced Right? A Comprehensive Guide
Albany International Corp (NYSE:AIN) recently saw a daily gain of 4.52%, despite a 3-month loss of -2.19%. With an Earnings Per Share (EPS) (EPS) of 2.63, the question arises: is the stock fairly valued? This article aims to explore Albany International's financial health, growth prospects, and valuation to answer this question. Keep reading to discover whether it's the right time to invest in Albany International.
Company Introduction
Albany International Corp is a leading player in the processing of textiles and materials. The company operates two business segments: the machine clothing segment, which produces and provides custom-designed fabrics and belts for production in paper, nonwovens, and other process industries; and the Albany engineered composites segment, which offers engineered composite parts for aerospace and defense industries. With a global operation, Albany International generates revenue from various regions, including the United States, Switzerland, Brazil, China, Mexico, France, and others.
At a stock price of $89.34 per share, Albany International has a market cap of $2.80 billion. The company's fair value, according to the GF Value, is $98.3, suggesting that the stock is fairly valued.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on three factors: historical multiples (PE Ratio, PS Ratio, PB Ratio and Price-to-Free-Cash-Flow) that the stock has traded at; a GuruFocus adjustment factor based on the company's past returns and growth; and future estimates of the business performance.
According to the GF Value, Albany International (NYSE:AIN) stock is fairly valued. The stock price is expected to fluctuate around the GF Value Line. If the price is significantly above the GF Value Line, the stock may be overvalued and its future return could be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher. Given Albany International's current price and market cap, the stock is believed to be fairly valued.
As Albany International is fairly valued, the long-term return of its stock is likely to align with the rate of its business growth.
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Albany International's Financial Strength
Investing in companies with poor financial strength can lead to a higher risk of permanent capital loss. Therefore, it's crucial to carefully review a company's financial strength before deciding to buy its stock. A good starting point for understanding a company's financial strength is to look at its cash-to-debt ratio and interest coverage. Albany International has a cash-to-debt ratio of 0.62, which is better than 55.51% of 989 companies in the Manufacturing - Apparel & Accessories industry. GuruFocus ranks Albany International's overall financial strength at 7 out of 10, indicating fair financial strength.
Profitability and Growth
Consistently profitable companies offer less risk for investors. Albany International has been profitable for 10 out of the past 10 years. Over the past twelve months, the company had a revenue of $1.10 billion and an Earnings Per Share (EPS) of $2.63. Its operating margin is 16.56%, which ranks better than 90.03% of 1043 companies in the Manufacturing - Apparel & Accessories industry. As for growth, Albany International's 3-year average annual revenue growth is 0.3%, which ranks worse than 57.83% of 1015 companies in the same industry. The 3-year average EBITDA growth rate is -5.8%, which ranks worse than 73.96% of 864 companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Albany International's ROIC was 10.28, while its WACC came in at 10.95.
Conclusion
In conclusion, the stock of Albany International (NYSE:AIN) is believed to be fairly valued. The company's financial condition is fair, and its profitability is strong. However, its growth ranks worse than 73.96% of 864 companies in the Manufacturing - Apparel & Accessories industry. To learn more about Albany International stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
