Criteo SA (CRTO, Financial) experienced a daily loss of 15.11% and a 3-month loss of 28.49%. Despite these losses, the company's Earnings Per Share (EPS) (EPS) stand at 0.09. This leads us to the question: Is Criteo SA (CRTO) modestly undervalued? Our valuation analysis reveals intriguing insights. We invite you to delve into our comprehensive analysis below.
Company Overview
Headquartered in Paris, Criteo SA is a leading player in the digital advertising market. The company's technology allows retailers to launch real-time, multichannel, and cross-device marketing campaigns. With a real-time ROI analysis of ads, clients can dynamically adjust their marketing strategies. The company also offers technology that enables retailers to manage their ad inventories effectively and optimize yield. The current stock price is $23.76, and the market cap stands at $1.30 billion. The GF Value, our estimate of the fair value, is $31.07, suggesting that the stock might be modestly undervalued.
Understanding the GF Value
The GF Value is our unique measure of a stock's current intrinsic value. It's derived from historical multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line gives an overview of the fair value at which the stock should ideally trade. If the stock price is significantly above the GF Value Line, it's overvalued, and future returns are likely to be poor. Conversely, if it's significantly below the GF Value Line, future returns are likely to be higher.
Given its current price of $23.76 per share and a market cap of $1.30 billion, Criteo SA (CRTO, Financial) appears to be modestly undervalued. This suggests that the long-term return of its stock is likely to be higher than its business growth.
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Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before buying shares. Criteo SA has a cash-to-debt ratio of 2.29, ranking better than 60.2% of 1005 companies in the Media - Diversified industry. Based on this, we rank Criteo SA's financial strength as 8 out of 10, suggesting a strong balance sheet.
Profitability and Growth
Investing in profitable companies carries less risk. Criteo SA has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $1.90 billion and Earnings Per Share (EPS) of $0.09. Its operating margin of 1.59% is worse than 56.59% of 1032 companies in the Media - Diversified industry. Overall, we rank Criteo SA's profitability as fair.
Growth is one of the most important factors in the valuation of a company. The average annual revenue growth of Criteo SA is -2.3%, which ranks worse than 56.15% of 951 companies in the Media - Diversified industry. The 3-year average EBITDA growth is -4.7%, which ranks worse than 63.28% of 768 companies in the Media - Diversified industry.
ROIC vs WACC
Another method of determining the profitability of a company is to compare its return on invested capital (ROIC) to the weighted average cost of capital (WACC). When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Criteo SA's return on invested capital is 0.69, and its cost of capital is 6.07.
Conclusion
In summary, the stock of Criteo SA (CRTO, Financial) shows every sign of being modestly undervalued. The company's financial condition is strong, and its profitability is fair. Its growth ranks worse than 63.28% of 768 companies in the Media - Diversified industry. To learn more about Criteo SA 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.
