Unveiling Fox Factory Holding (FOXF)'s Value: Is It Really Priced Right? A Comprehensive Guide
Fox Factory Holding Corp (NASDAQ:FOXF) experienced a daily loss of 3.62%, and a 3-month loss of 5.23%. Despite this, the company reported an impressive Earnings Per Share (EPS) of 4.37. But is the stock significantly undervalued? This article will provide a comprehensive analysis to answer this question. Keep reading to gain valuable insights into Fox Factory Holding's valuation.
Company Introduction
Fox Factory Holding Corp is a leading designer, manufacturer, and marketer of performance-defining products and systems used primarily on bikes, Side-by-Sides, on-road vehicles with and without off-road capabilities, off-road vehicles and trucks, ATVs, snowmobiles, specialty vehicles and applications, motorcycles, and commercial trucks. The company operates under the FOX, FOX RACING SHOX, and RACE FACE brands. It has a strong presence in North America, Asia, Europe, and the rest of the world.
The current stock price of Fox Factory Holding (NASDAQ:FOXF) is $94.84, while the GF Value, an estimation of its fair value, stands at $149.15. This comparison suggests that Fox Factory Holding's stock may be significantly undervalued. The following analysis will delve deeper into this evaluation.
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.
GuruFocus adjustment factor based on the company's past returns and growth.
Future estimates of the business performance.
At its current price of $94.84 per share, Fox Factory Holding has a market cap of $4 billion, suggesting that the stock is significantly undervalued. Therefore, the long-term return of its stock is likely to be much 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 whether to buy shares. Fox Factory Holding has a cash-to-debt ratio of 0.31, which ranks worse than 66.42% of 1230 companies in the Vehicles & Parts industry. Despite this, GuruFocus ranks Fox Factory Holding's financial strength as 8 out of 10, suggesting a strong balance sheet.
Profitability and Growth
Investing in profitable companies, especially those that have demonstrated consistent profitability over the long term, poses less risk. Fox Factory Holding has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $1.60 billion and Earnings Per Share (EPS) of $4.37. Its operating margin is 14.18%, which ranks better than 89.41% of 1265 companies in the Vehicles & Parts industry. Overall, GuruFocus ranks the profitability of Fox Factory Holding at 9 out of 10, which indicates strong profitability.
Growth is a crucial factor in the valuation of a company. The 3-year average annual revenue growth of Fox Factory Holding is 25.4%, which ranks better than 89.14% of 1206 companies in the Vehicles & Parts industry. The 3-year average EBITDA growth rate is 27.8%, which ranks better than 79.98% of 1079 companies in the Vehicles & Parts 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. For the past 12 months, Fox Factory Holding's ROIC is 14.22, and its cost of capital is 13.54, implying the company is creating value for shareholders.
Conclusion
In summary, the stock of Fox Factory Holding appears to be significantly undervalued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 79.98% of 1079 companies in the Vehicles & Parts industry. To learn more about Fox Factory Holding stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
