Apollo Global Management Inc (APO, Financial) has been making waves in the stock market with its daily gain of 9.58%, and a 3-month gain of 4.18%. The company's Earnings Per Share (EPS) (EPS) stands at 2.12. But the question remains: is the stock fairly valued? This article will delve into a valuation analysis of Apollo Global Management (APO) to provide an answer. Let's dive in!
A Brief Overview of Apollo Global Management Inc (APO, Financial)
Apollo Global Management Inc is a renowned alternative investment manager. It operates across multiple sectors, including chemicals, manufacturing and industrial, natural resources, consumer and retail, consumer services, business services, financial services, leisure, and media and telecom and technology. The company's primary business segments include Asset Management, Retirement Services, and Principal Investing, with Retirement Services generating the maximum revenue.
With a current stock price of $84.86 per share, Apollo Global Management has a market cap of $48.10 billion. The GF Value, an estimation of the stock's fair value, stands at $80.29, indicating that the stock is fairly valued.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, computed based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line on our summary page offers an overview of the stock's fair trading value.
If the stock price is significantly above the GF Value Line, it is considered 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.
For Apollo Global Management (APO, Financial), the GF Value estimates the stock's fair value based on three key factors: historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. At its current price of $84.86 per share, Apollo Global Management is believed to be fairly valued.
Because Apollo Global Management is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
Link: These companies may deliever higher future returns at reduced risk.
Financial Strength of Apollo Global Management
Investing in companies with poor financial strength can pose a high risk of permanent capital loss. To avoid this, it's crucial to review a company's financial strength before deciding to purchase shares. Apollo Global Management has a cash-to-debt ratio of 21.71, which ranks better than 51.64% of 1464 companies in the Asset Management industry. The overall financial strength of Apollo Global Management is 6 out of 10, indicating that it's fair.
Profitability and Growth of Apollo Global Management
Investing in profitable companies carries less risk, especially if they have demonstrated consistent profitability over the long term. Apollo Global Management has been profitable 8 years over the past 10 years. During the past 12 months, the company had revenues of $26.80 billion and Earnings Per Share (EPS) of $2.12. Its operating margin of 10.98% is worse than 52.37% of 613 companies in the Asset Management industry. Overall, GuruFocus ranks Apollo Global Management's profitability as strong.
Growth is an essential factor in the valuation of a company. Apollo Global Management's 3-year average annual revenue growth is 10.1%, which ranks better than 58.1% of 895 companies in the Asset Management industry. However, the 3-year average EBITDA growth rate is 0%, which ranks worse than 0% of 461 companies in the Asset Management industry.
ROIC vs WACC Analysis
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can also evaluate its profitability. Apollo Global Management's ROIC is 0.78 while its WACC came in at 13.96. If the ROIC exceeds the WACC, the company is likely creating value for its shareholders.
Conclusion
In conclusion, Apollo Global Management (APO, Financial) stock is believed to be fairly valued. The company's financial condition is fair, its profitability is strong, but its growth ranks worse than 0% of 461 companies in the Asset Management industry. To learn more about Apollo Global Management stock, you can check out its 30-Year Financials here.
To find out the high-quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
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.
