The stock of Enel Chile SA (NYSE:ENIC, 30-year Financials) is believed to be fairly valued, 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 $3.91 per share and the market cap of $5.4 billion, Enel Chile SA stock is estimated to be fairly valued. GF Value for Enel Chile SA is shown in the chart below.
Because Enel Chile SA is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Enel Chile SA has a cash-to-debt ratio of 9999.00, which which ranks in the bottom 10% of the companies in the industry of Utilities - Regulated. The overall financial strength of Enel Chile SA is 5 out of 10, which indicates that the financial strength of Enel Chile SA is fair. This is the debt and cash of Enel Chile SA over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Enel Chile SA has been profitable 7 over the past 10 years. Over the past twelve months, the company had a revenue of $3.3 billion and loss of $0.025 a share. Its operating margin is 26.25%, which ranks better than 79% of the companies in the industry of Utilities - Regulated. Overall, the profitability of Enel Chile SA is ranked 6 out of 10, which indicates fair profitability. This is the revenue and net income of Enel Chile SA over the past years:
Growth is probably one of the most important factors in the valuation of a company. GuruFocus' research has found that growth is closely correlated with the long-term performance of a company's stock. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Likewise, if a company's revenue and earnings are declining, the value of the company will decrease. Enel Chile SA's 3-year average revenue growth rate is in the bottom 10% of the companies in the industry of Utilities - Regulated. Enel Chile SA's 3-year average EBITDA growth rate is -43%, which ranks in the bottom 10% of the companies in the industry of Utilities - Regulated.
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average 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 return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Enel Chile SA's ROIC is 3.36 while its WACC came in at 7.66. The historical ROIC vs WACC comparison of Enel Chile SA is shown below:
Overall, Enel Chile SA (NYSE:ENIC, 30-year Financials) stock appears to be fairly valued. The company's financial condition is fair and its profitability is fair. Its growth ranks in the bottom 10% of the companies in the industry of Utilities - Regulated. To learn more about Enel Chile SA stock, you can check out its 30-year Financials here.
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