Unveiling Mettler-Toledo International (MTD)'s Value: Is It Really Priced Right? A ...
Despite a daily loss of 2.7% and a 3-month loss of 12.76%, Mettler-Toledo International Inc (NYSE:MTD) maintains an impressive Earnings Per Share (EPS) (EPS) of 39.78. The question we aim to answer: is the stock modestly undervalued? This article offers an in-depth valuation analysis of Mettler-Toledo International, encouraging readers to delve into the subsequent analysis for a comprehensive understanding.
Company Introduction
Mettler-Toledo International, a leading supplier of weighing and precision instruments, has an extensive customer base spanning the life sciences, industrial, and food retail industries. The company's diverse product range includes laboratory and retail scales, pipettes, pH meters, thermal analysis equipment, titrators, metal detectors, and X-ray analyzers. Mettler-Toledo International dominates the market for weighing instrumentation, controlling over 50% of the market for lab balances. The business boasts a geographically diversified sales distribution: approximately 30% in the United States, 30% in Europe, 20% in China, and 20% in the rest of the world.
Understanding the GF Value
The GF Value is a proprietary estimation of a stock's intrinsic value, calculated considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the stock's ideal fair trading value.
According to GuruFocus Value calculation, Mettler-Toledo International (NYSE:MTD) appears to be modestly undervalued. The stock is currently traded at $1130.7 per share, with a market cap of $24.70 billion, indicating that the stock is modestly undervalued. As Mettler-Toledo International is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
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Examining Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. Mettler-Toledo International has a cash-to-debt ratio of 0.04, ranking worse than 96.07% of 229 companies in the Medical Diagnostics & Research industry. Based on this, GuruFocus ranks Mettler-Toledo International's financial strength as 5 out of 10, suggesting a fair balance sheet.
Profitability and Growth
Investing in profitable companies, especially those demonstrating consistent profitability over the long term, poses less risk. Mettler-Toledo International has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $4 billion and an EPS of $39.78. Its operating margin is 29.61%, ranking better than 94.69% of 226 companies in the Medical Diagnostics & Research industry. Overall, GuruFocus ranks the profitability of Mettler-Toledo International at 10 out of 10, indicating strong profitability.
Growth is one of the most important factors in the valuation of a company. The average annual revenue growth of Mettler-Toledo International is 12.7%, ranking better than 56.1% of 205 companies in the Medical Diagnostics & Research industry. The 3-year average EBITDA growth is 19%, ranking better than 61.38% of 189 companies in the Medical Diagnostics & Research 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. ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Mettler-Toledo International's ROIC was 35.64, while its WACC came in at 11.49.
Conclusion
In conclusion, the stock of Mettler-Toledo International (NYSE:MTD) appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 61.38% of 189 companies in the Medical Diagnostics & Research industry. To learn more about Mettler-Toledo International stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
