Veeva Systems Inc (VEEV, Financial) has seen a daily gain of 2.14%, and a 3-month gain of 4.5%. With an Earnings Per Share (EPS) of 3.32, the question arises: is the stock modestly undervalued? This article aims to provide a comprehensive analysis of Veeva Systems' valuation. Keep reading to delve into the company's financials and determine its intrinsic value.
Company Introduction
Veeva Systems, a global leader in providing cloud-based software solutions for the life sciences industry, caters to a diverse clientele ranging from emerging biotechnology companies to departments of global pharmaceutical manufacturers. The company's best-of-breed offerings address operating and regulatory requirements, improving the efficiency and compliance of the life sciences industry. Veeva Systems' two main products are Veeva CRM, a customer relationship management platform, and Veeva Vault, a content management platform.
At a stock price of $205.72, Veeva Systems boasts a market cap of $33.10 billion. The company's GF Value, a proprietary measure of its intrinsic value, stands at $266.18, indicating that the stock may be modestly undervalued.
Deciphering the GF Value
The GF Value is an estimation of a stock's fair value, calculated considering historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line on our summary page provides an overview of the stock's ideal trading value.
Veeva Systems (VEEV, Financial) stock appears to be modestly undervalued based on the GF Value. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher. Given Veeva Systems' relatively undervalued status, the long-term return of its stock is likely to be higher than its business growth.
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Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this risk, investors must review a company's financial strength before purchasing shares. Both the cash-to-debt ratio and interest coverage of a company are great ways to understand its financial strength. Veeva Systems has a cash-to-debt ratio of 66.13, which ranks better than 88.62% of 650 companies in the Healthcare Providers & Services industry. The overall financial strength of Veeva Systems is 8 out of 10, indicating that it is financially strong.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Veeva Systems has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $2.20 billion and Earnings Per Share (EPS) of $3.32. Its operating margin is 17.74%, which ranks better than 86.56% of 655 companies in the Healthcare Providers & Services industry. Overall, the profitability of Veeva Systems is strong.
Growth is probably the most important factor in the valuation of a company. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Veeva Systems is23.9%, which ranks better than 78.98% of 566 companies in the Healthcare Providers & Services industry. The 3-year average EBITDA growth rate is 15.8%, which ranks better than 59.77% of 517 companies in the Healthcare Providers & Services industry.
ROIC vs WACC
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, Veeva Systems's ROIC was 26.14, while its WACC came in at 10.7.
Conclusion
In summary, the stock of Veeva Systems (VEEV, Financial) appears to be modestly undervalued. The company's financial condition is strong and its profitability is robust. Its growth ranks better than 59.77% of companies in the Healthcare Providers & Services industry. To learn more about Veeva Systems 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.
