Apyx Medical Stock Gives Every Indication Of Being Modestly Overvalued
- By GF Value
The stock of Apyx Medical (NAS:APYX, 30-year Financials) is estimated to be modestly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $9.76 per share and the market cap of $334.9 million, Apyx Medical stock is estimated to be modestly overvalued. GF Value for Apyx Medical is shown in the chart below.
Because Apyx Medical is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 35.4% over the past five years.
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It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Apyx Medical has a cash-to-debt ratio of 70.86, which is better than 82% of the companies in the industry of Medical Devices & Instruments. The overall financial strength of Apyx Medical is 7 out of 10, which indicates that the financial strength of Apyx Medical is fair. This is the debt and cash of Apyx Medical over the past years:
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Apyx Medical has been profitable 3 years over the past 10 years. During the past 12 months, the company had revenues of $31.4 million and loss of $0.43 a share. Its operating margin of -55.29% worse than 73% of the companies in the industry of Medical Devices & Instruments. Overall, GuruFocus ranks Apyx Medical's profitability as poor. This is the revenue and net income of Apyx Medical over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Apyx Medical is 35.4%, which ranks better than 89% of the companies in the industry of Medical Devices & Instruments. The 3-year average EBITDA growth rate is -9.3%, which ranks worse than 79% of the companies in the industry of Medical Devices & Instruments.
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (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, Apyx Medical's ROIC was -66.38, while its WACC came in at 8.88. The historical ROIC vs WACC comparison of Apyx Medical is shown below:
To conclude, Apyx Medical (NAS:APYX, 30-year Financials) stock is believed to be modestly overvalued. The company's financial condition is fair and its profitability is poor. Its growth ranks worse than 79% of the companies in the industry of Medical Devices & Instruments. To learn more about Apyx Medical stock, you can check out its 30-year Financials here.
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This article first appeared on GuruFocus.
