Unveiling PGT Innovations (PGTI)'s Value: Is It Really Priced Right? A Comprehensive Guide
PGT Innovations Inc (NYSE:PGTI) has seen a significant daily gain of 21.91%, with a 3-month gain of 15.57% and an Earnings Per Share (EPS) (EPS) of 1.75. With these figures in mind, a key question arises: Is PGT Innovations fairly valued? This article will delve into a comprehensive valuation analysis to address this question. Let's dive in.
Introducing PGT Innovations Inc
PGT Innovations Inc is a leading manufacturer of impact-resistant aluminum and vinyl-framed windows and doors. The company offers a broad range of fully customizable window and door products, distributing through multiple channels, including window distributors, building supply distributors, window replacement dealers, and enclosure contractors. The majority of its revenue is generated from Florida, although it also has a presence in the Caribbean, Canada, and South and Central America.
PGT Innovations' stock is currently priced at $31.94 per share, with a market cap of $1.90 billion. This price closely aligns with its GF Value, a proprietary measure of fair value, which stands at $29.3. This suggests that the stock is fairly valued. Here is a breakdown of the company's income:
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, computed based on three factors:
Historical trading multiples like PE Ratio, PS Ratio, PB Ratio, and Price-to-Free-Cash-Flow
A GuruFocus adjustment factor based on past performance and growth
Future estimates of business performance
The GF Value Line represents the fair trading value of the stock. If the stock price is significantly above this line, it's overvalued and its future return is likely to be poor. Conversely, if the price is significantly below the line, the stock is undervalued and its future return is likely to be higher.
PGT Innovations' stock is believed to be fairly valued. Given this, the long-term return of its stock is likely to align with the rate of its business growth.
PGT Innovations' Financial Strength
Investing in companies with strong financial strength reduces the risk of permanent loss. PGT Innovations' financial strength is fair, with a cash-to-debt ratio of 0.05, which is lower than 93.13% of companies in the Construction industry. Here is a snapshot of the company's debt and cash over the past years:
Profitability and Growth of PGT Innovations
Companies with high profitability typically offer better performance potential. PGT Innovations has been profitable for 10 out of the past 10 years, with an operating margin of 12.14%, better than 80.6% of companies in the Construction industry.
Growth is a crucial factor in a company's valuation. PGT Innovations boasts an average annual revenue growth of 25.2%, ranking better than 89.41% of companies in the Construction industry. The 3-year average EBITDA growth is 22.9%, which ranks better than 78.36% of companies in the same industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can provide insights into its profitability. For the past 12 months, PGT Innovations' ROIC was 9.98, while its WACC stood at 9.2, indicating that the company is creating value for shareholders.
Conclusion
In summary, PGT Innovations' stock is believed to be fairly valued. The company exhibits fair financial strength, strong profitability, and superior growth compared to other companies in the Construction industry. For more information about PGT Innovations' stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
