Unveiling the Investment Potential of Universal Display Corp (OLED): A Comprehensive Analysis ...
Universal Display Corp (NASDAQ:OLED) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $154.73, Universal Display Corp has witnessed a decline of 2.48% over a period, marked against a three-month change of 8.2%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Universal Display Corp is well-positioned for substantial growth in the near future.
Decoding 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.
Universal Display Corp has been assigned the following ranks:
1. Financial strength rank: 8/10
2. Profitability rank: 10/10
3. Growth rank: 10/10
4. GF Value rank: 5/10
5. Momentum rank: 9/10
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 decent ranks in GF value and momentum, GuruFocus assigned Universal Display Corp the GF Score of 97 out of 100, which signals the highest outperformance potential.
Understanding Universal Display Corp Business
Universal Display Corp, with a market cap of $7.33 billion, is a leading player in the development and manufacture of organic light-emitting diode, or OLED, technologies. These technologies are used in displays for mobile phones, tablets, televisions, wearables, personal computers, automotive interiors, and the solid-state lighting market. OLED technologies are an alternative to a light-emitting diode, or LED, technologies, in the solid-state lighting market, and liquid crystal displays in the flat-panel-display market. A large majority of the firm's revenue is generated in South Korea, with the rest coming from Japan, China, the United States, and other countries across the world.
Financial Strength Breakdown
According to the Financial Strength rating, Universal Display Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With an Altman Z-Score of 24.53, Universal Display Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.05, Universal Display Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Universal Display Corp's impressive standing among its peers in generating profit. Universal Display Corp Operating Margin has increased (88.91%) over the past five years, as shown by the following data: 2018: 22.93; 2019: 39.08; 2020: 36.73; 2021: 41.13; 2022: 43.32. Furthermore, Universal Display Corp's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 78.36; 2019: 81.40; 2020: 80.07; 2021: 79.23; 2022: 79.26. This trend underscores the company's growing proficiency in transforming revenue into profit. Universal Display Corp's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Universal Display Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 14.6%, which outperforms better than 77.73% of 2313 companies in the Hardware industry. Moreover, Universal Display 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 16.7, and the rate over the past five years is 19.1. This trend accentuates the company's continued capability to drive growth.
Conclusion
With its strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights Universal Display Corp's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. 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.
