Amidst a challenging market environment, XPEL Inc (XPEL, Financial) has experienced a notable daily loss of -8.82%, and a significant 3-month decline of -43.37%. However, with an Earnings Per Share (EPS) of $1.76, investors are prompted to consider whether this stock is significantly undervalued. This article embarks on a valuation analysis to decipher the true worth of XPEL (XPEL) and to determine if the current market price reflects its intrinsic value.
Company Introduction
XPEL Inc (XPEL, Financial) is a global leader in the provision of protective films and coatings, including automotive paint protection film, surface protection film, and ceramic coatings. With a network of trained installers and proprietary DAP software, XPEL is committed to exceeding customer expectations through superior products and services. Despite its current market cap of $1.30 billion and robust sales of $356.30 million, the company's stock price of $45.61 stands in stark contrast to its Fair Value (GF Value) of $91.09, suggesting a potential mispricing worth exploring.
Summarize GF Value
The GF Value is a proprietary metric that measures the intrinsic value of a stock, taking into account historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. This valuation suggests that XPEL (XPEL, Financial) is significantly undervalued. The GF Value Line, a visual representation of this fair value estimation, indicates that XPEL's stock should trade higher than its current price, offering a promising outlook for potential future returns.
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Financial Strength
Investing in companies with robust financial strength can mitigate the risk of permanent capital loss. XPEL's cash-to-debt ratio of 0.49, although not leading the industry, still reflects a strong balance sheet. GuruFocus awards XPEL a financial strength rating of 8 out of 10, underscoring the company's solid financial foundation.
Profitability and Growth
Profitable companies, particularly those with consistent performance, present less risk. XPEL's impressive operating margin of 17.76% surpasses 94.25% of its industry peers, reflecting its strong profitability. Furthermore, the company's growth is commendable, with a 3-year average revenue growth rate that outperforms 93.31% of competitors in the Vehicles & Parts industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can reveal its value creation capability. XPEL's ROIC of 30.63 is nearly double its WACC of 15.85, indicating the company's effectiveness in generating cash flow relative to the capital invested.
Conclusion
In conclusion, the evidence suggests that XPEL (XPEL, Financial) is significantly undervalued. The company boasts a strong financial condition, exceptional profitability, and impressive growth metrics. For a more comprehensive understanding of XPEL's financial health, interested parties are encouraged to review 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.
