Unveiling Americold Realty Trust (COLD)'s Value: Is It Really Priced Right? A Comprehensive Guide
The stock of Americold Realty Trust Inc (NYSE:COLD) experienced a daily loss of -4.22% and a 3-month loss of -14.8%. With a Loss Per Share of 0.42, the question arises: is the stock modestly undervalued? This article presents a valuation analysis of Americold Realty Trust (NYSE:COLD) to answer this question. Read on to unravel the intrinsic value of the stock and make informed investment decisions.
Company Introduction
Americold Realty Trust Inc is the world's second-largest owner and operator of temperature-controlled warehouses. Based in Atlanta, Georgia, the company owns approximately 240 temperature-controlled warehouses, spanning 1.4 billion cubic feet. In 2021, the firm derived about 79% of its revenue from the United States but also has sizable operations in Europe, Canada, Australia, and New Zealand. Americold Realty Trust supplements its core business by providing supply management and transportation services to its various customers. It operates as a real estate investment trust.
The stock of Americold Realty Trust is currently priced at $26.3, while its fair value (GF Value) is estimated at $30.72, suggesting that the stock might be modestly undervalued.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, computed based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value that the stock should ideally trade at.
If the stock price is significantly above the GF Value Line, the stock 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. Currently, the stock of Americold Realty Trust shows every sign of being modestly undervalued. This suggests that the long-term return of its stock is likely to be higher than its business growth.
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Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it is crucial to review a company's financial strength before deciding to buy shares. Looking at the cash-to-debt ratio and interest coverage can provide a good initial perspective on the company's financial strength. Americold Realty Trust has a cash-to-debt ratio of 0.01, which ranks worse than 87.05% of 726 companies in the REITs industry. Based on this, GuruFocus ranks Americold Realty Trust's financial strength as 4 out of 10, indicating a poor balance sheet.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Americold Realty Trust has been profitable 4 times over the past 10 years. Over the past twelve months, the company had a revenue of $2.80 billion and a Loss Per Share of $0.42. Its operating margin is 6.1%, which ranks worse than 92.29% of 687 companies in the REITs industry. Overall, the profitability of Americold Realty Trust is ranked 5 out of 10, indicating fair profitability.
Growth is a crucial factor in the valuation 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 Americold Realty Trust is 3.7%, which ranks better than 63.39% of 631 companies in the REITs industry. However, the 3-year average EBITDA growth rate is -2.3%, which ranks worse than 61.35% of 533 companies in the REITs industry.
ROIC vs WACC
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). 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. During the past 12 months, Americold Realty Trust's ROIC was 1.95 while its WACC came in at 7.56.
Conclusion
Overall, Americold Realty Trust (NYSE:COLD) stock shows every sign of being modestly undervalued. The company's financial condition is poor, and its profitability is fair. Its growth ranks worse than 61.35% of 533 companies in the REITs industry. To learn more about Americold Realty Trust stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
