On November 7, 2023, JELD-WEN Holding Inc (JELD, Financial) experienced a significant daily gain of 17.69%, despite a 3-month loss of 21.37%. The company's Earnings Per Share (EPS) (EPS) stands at 0.64, raising the question: Is JELD-WEN Holding significantly undervalued? This article delves into an in-depth valuation analysis of JELD-WEN Holding, providing insights into its financial performance and intrinsic value.
Company Overview
JELD-WEN Holding Inc is a prominent player in the door and window manufacturing industry. The company designs, produces, and distributes a wide selection of doors, windows, walls, and related products, primarily used in the construction of residential single and multi-family homes and non-residential buildings. The majority of its revenue comes from North America, although it also operates in Europe and Australasia.
The company's stock price currently stands at $14.5 per share, with a market cap of $1.20 billion. This valuation analysis will compare the stock price with the GF Value, a proprietary measure of a stock's fair value, providing a comprehensive understanding of JELD-WEN Holding's intrinsic value.
The GF Value Explained
The GF Value represents the current intrinsic value of a stock, calculated based on historical trading 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.
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. Based on the GF Value, JELD-WEN Holding (JELD, Financial) is believed to be significantly undervalued. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength
Investing in companies with poor financial strength can lead to a higher risk of permanent loss of capital. Therefore, it's crucial to carefully review a company's financial strength before deciding to buy its stock. A great starting point for understanding the financial strength of a company is looking at its cash-to-debt ratio and interest coverage.
JELD-WEN Holding has a cash-to-debt ratio of 2.44, which is worse than 86.68% of 1607 companies in the Construction industry. GuruFocus ranks the overall financial strength of JELD-WEN Holding at 5 out of 10, indicating fair financial strength.
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. JELD-WEN Holding has been profitable 8 over the past 10 years. Over the past twelve months, the company had a revenue of $5 billion and an EPS of $0.64. Its operating margin is 4.49%, which ranks worse than 54.42% of 1630 companies in the Construction industry. Overall, the profitability of JELD-WEN Holding is ranked 7 out of 10, indicating fair profitability.
Growth is a crucial factor in the valuation of a company. A faster-growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of JELD-WEN Holding is 11.7%, which ranks better than 73.94% of 1554 companies in the Construction industry. The 3-year average EBITDA growth rate is 1.6%, which ranks worse than 55.02% of 1325 companies in the Construction industry.
ROIC vs WACC
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 ROIC exceeds the WACC, the company is likely creating value for its shareholders. JELD-WEN Holding's ROIC is 5.76 while its WACC came in at 8.89.
Conclusion
Overall, JELD-WEN Holding (JELD, Financial) stock is believed to be significantly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks worse than 55.02% of 1325 companies in the Construction industry. To learn more about JELD-WEN Holding 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.
