With a daily loss of 12.05% and a 3-month loss of 34.78%, Tecnoglass Inc (TGLS, Financial) appears to be in a challenging position. Despite the losses, the company's Earnings Per Share (EPS) stands at 4.25, raising the question: is the stock modestly undervalued? This article delves into the valuation analysis of Tecnoglass, providing insights into the intrinsic value of the stock. Read on for a comprehensive exploration.
Company Overview
Tecnoglass Inc designs, manufactures, distributes, and markets architectural glass and windows. The company's products, which include tempered, laminated, insulating, and Solar Control Low-E glass, are installed at various establishments such as hotels, residential buildings, commercial and corporate centers, airports, and hospitals. The majority of the company's revenue is derived from the sale and installation of architectural glass and windows in the United States. As of November 6, 2023, the stock price stands at $30.13, with the GF Value, an estimation of fair value, at $40.4. This discrepancy suggests that the stock may be modestly undervalued.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. This value is derived from historical multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
According to GuruFocus Value calculation, Tecnoglass (TGLS, Financial) appears to be modestly undervalued. With a current price of $30.13 per share and a market cap of $1.40 billion, the stock shows signs of being modestly undervalued. Consequently, the long-term return of Tecnoglass stock is likely to be higher than its business growth.
Financial Strength
Investing in companies with low financial strength can result in permanent capital loss. Therefore, analyzing a company's financial strength is crucial before deciding to buy shares. Tecnoglass has a cash-to-debt ratio of 0.63, ranking better than 55.65% of 363 companies in the Building Materials industry. This strong balance sheet earns Tecnoglass a financial strength rank of 8 out of 10 from GuruFocus.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, poses less risk. Tecnoglass has been profitable for 8 out of the past 10 years. With a revenue of $840.80 million and Earnings Per Share (EPS) of $4.25 in the past twelve months, the company's operating margin is 36.38%. This ranks better than 98.38% of 370 companies in the Building Materials industry, indicating strong profitability.
Growth is a critical factor in the valuation of a company. Tecnoglass's 3-year average revenue growth rate is better than 80% of 355 companies in the Building Materials industry. Its 3-year average EBITDA growth rate is 42.9%, ranking better than 89.03% of 319 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted cost of capital (WACC) provides another perspective on its profitability. ROIC measures how well a company generates cash flow relative to the capital it has invested in its business, while WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. For the past 12 months, Tecnoglass's ROIC is 37.77, and its WACC is 21.92.
Conclusion
In conclusion, Tecnoglass (TGLS, Financial) appears to be modestly undervalued. The company's financial condition is strong, its profitability robust, and its growth ranks better than 89.03% of 319 companies in the Building Materials industry. To learn more about Tecnoglass 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.
