Unveiling Helen Of Troy (HELE)'s Value: Is It Really Priced Right? A Comprehensive Guide
On October 4, 2023, Helen Of Troy (NASDAQ:HELE) recorded a daily loss of -8.48% and a 3-month loss of -5.73%. Despite these losses, the company reported a robust Earnings Per Share (EPS) (EPS) of 5.87. This raises the question, is Helen Of Troy significantly undervalued? This article aims to answer this question by providing a comprehensive valuation analysis of Helen Of Troy.
Company Introduction
Helen Of Troy Ltd is a consumer products company that offers creative solutions through a diversified portfolio of brands. It operates in two segments: Home & Outdoor and Beauty & Wellness. The former provides a broad range of consumer products for home activities and outdoor activities, while the latter offers beauty and wellness products. As of October 4, 2023, Helen Of Troy's stock price is $104, with a market cap of $2.50 billion, significantly lower than its GF Value of $204.99. This suggests that the stock might be significantly undervalued.
Understanding GF Value
The GF Value is a proprietary estimation of a stock's intrinsic value, calculated based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. If a stock's price is significantly above the GF Value Line, it is considered overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Helen Of Troy's stock appears to be significantly undervalued based on the GF Value calculation. At its current price of $104 per share, the stock seems to offer a high future return potential given its significant undervaluation.
Because Helen Of Troy is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength Analysis
Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Therefore, it's crucial to review the financial strength of a company before deciding to buy its stock. Helen Of Troy has a cash-to-debt ratio of 0.04, which ranks worse than 89.01% of companies in the Consumer Packaged Goods industry. However, its overall financial strength is fair, ranking 6 out of 10.
Profitability and Growth
Companies that have been consistently profitable offer less risk for investors. Helen Of Troy has been profitable for the past 10 years, boasting an operating margin of 12.42%, which ranks better than 80.12% of companies in the Consumer Packaged Goods industry. The company's strong profitability is ranked 9 out of 10.
Long-term stock performance is closely correlated with growth. Helen Of Troy's average annual revenue growth is 8.5%, ranking better than 56.52% of companies in the Consumer Packaged Goods industry. Its 3-year average EBITDA growth is 7.7%, ranking better than 52.61% of companies in the same 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. Helen Of Troy's ROIC was 8.19 over the past 12 months, while its WACC came in at 6.62. This indicates that the company is creating value for shareholders.
Conclusion
In conclusion, Helen Of Troy's stock appears to be significantly undervalued. The company's financial condition is fair, its profitability is strong, and its growth ranks better than 52.61% of companies in the Consumer Packaged Goods industry. To learn more about Helen Of Troy stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
