Enova International Inc (ENVA, Financial) has recently experienced a daily gain of 7.77%, yet its 3-month performance shows a slight decrease of 2.98%. With an Earnings Per Share (EPS) of 5.91, investors might wonder if the stock is currently undervalued. This article delves into Enova International's valuation, providing an analysis that aims to answer whether the stock is indeed modestly undervalued, as suggested by the GF Value. Continue reading for a detailed valuation analysis.
Company Introduction
Enova International Inc provides innovative online financial services, focusing on consumer loans and credit accounts primarily in the United States and the United Kingdom. The company's quick online credit decisions and rapid fund disbursement have positioned it as a significant player in the financial sector. Enova International operates as both a direct lender and a facilitator between borrowers and other lenders, generating revenue through interest, finance charges, and transaction fees. With the majority of its revenue stemming from the U.S., the company's diverse product offerings include short-term loans, lines of credit, and installment loans. Against its current stock price of $47.27 and a market cap of $1.40 billion, we compare Enova International's performance with the estimated GF Value of $60.53 to gauge its fair valuation.
Summarize GF Value
The GF Value is a unique metric that estimates a stock's intrinsic value by considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line indicates the fair trading value for a stock. If a stock's price significantly exceeds the GF Value Line, it is likely overvalued and may result in poorer future returns. Conversely, a price well below the GF Value Line may indicate a higher potential for future returns. Enova International (ENVA, Financial) appears modestly undervalued at its current price, suggesting a promising outlook for long-term investors.
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Financial Strength
When considering an investment, the financial strength of a company is crucial to avoid potential capital loss. Enova International's financial strength is currently rated as 4 out of 10 by GuruFocus, primarily due to its cash-to-debt ratio of 0.03, which is lower than 83.95% of other companies in the Credit Services industry. This suggests a poor balance sheet, which is an important factor for investors to consider.
Profitability and Growth
Consistent profitability is a key indicator of a company's investment potential. Enova International has maintained profitability over the past decade, with a strong operating margin of 12.61%. Although this ranks below 58.42% of its industry peers, the company's profitability rank stands at 8 out of 10, reflecting a robust financial profile. Furthermore, Enova International's average annual revenue growth of 14.9% surpasses 70.67% of competitors in the Credit Services industry, indicating a strong capacity for growth.
ROIC vs. WACC
An assessment of a company's profitability can also be made by comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). Enova International's ROIC over the past 12 months stands at 5.44, which is slightly lower than its WACC of 5.7, indicating a potential challenge in creating value for shareholders.
Conclusion
In summary, Enova International (ENVA, Financial) presents signs of being modestly undervalued. While the company's financial condition raises some concerns, its profitability and growth prospects are strong. Investors interested in Enova International can further explore the company's 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.
