Unveiling the Investment Potential of Fox Factory Holding Corp (FOXF): A Comprehensive Analysis
Fox Factory Holding Corp (NASDAQ:FOXF) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $94.84, Fox Factory Holding Corp has witnessed a daily loss of 3.62%, marked against a three-month change of -5.23%. A thorough analysis, underlined by the GF Score, suggests that Fox Factory Holding Corp is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here are the key components of Fox Factory Holding Corp's GF Score:
Financial strength rank: 8/10
Profitability rank: 9/10
Growth rank: 10/10
GF Value rank: 10/10
Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and slightly lower ranks in GF value and momentum, GuruFocus assigned Fox Factory Holding Corp the GF Score of 97 out of 100, which signals the highest outperformance potential.
Introduction to Fox Factory Holding Corp
Fox Factory Holding Corp is a 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. Its business operates under the FOX, FOX RACING SHOX, and RACE FACE brands. Geographically, it derives a majority of revenue from North Americas and also has a presence in Asia, Europe, and the Rest of the World. The company has a market cap of $4.02 billion and sales of $1.62 billion, with an operating margin of 14.18%.
Financial Strength Analysis
According to the Financial Strength rating, Fox Factory Holding Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Fox Factory Holding Corp stands impressively at 17.38, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 6.59, Fox Factory Holding Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.21, Fox Factory Holding Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Analysis
The Profitability Rank shows Fox Factory Holding Corp's impressive standing among its peers in generating profit. Fox Factory Holding Corp's strong Predictability Rank of 3.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Analysis
Ranked highly in Growth, Fox Factory Holding Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 25.4%, which outperforms better than 89.14% of 1206 companies in the Vehicles & Parts industry. Moreover, Fox Factory Holding Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 27.8, and the rate over the past five years is 27.3. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given the company's strong financial strength, profitability, and growth metrics, the GF Score highlights Fox Factory Holding Corp's unparalleled position for potential outperformance. This analysis suggests that Fox Factory Holding Corp is a promising investment opportunity for value investors seeking robust returns. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
