Calumet Specialty Products Partners LP (CLMT, Financial) recently experienced a daily gain of 9.62%, contrasting with a 3-month loss of 9.75%. With a reported Loss Per Share of $0.55, investors are keen to understand whether the stock is fairly valued. This article aims to delve into Calumet Specialty Products Partners LP's valuation, providing investors with a comprehensive analysis of its financial position and market performance.
Company Introduction
Calumet Specialty Products Partners LP is a distinguished player in the North American specialty hydrocarbon products market. The company's operations are segmented into Specialty Products and Solutions, Performance Brands, and Montana/Renewables, with the Corporate segment encompassing general and administrative expenses. A pivotal factor in assessing the company's value is the comparison between the current stock price of $14.25 and the GF Value of $14.35, an estimated fair value that will be explored in depth.
Summarize GF Value
The GF Value is a unique valuation metric that considers historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. This value serves as a benchmark for what the stock should be trading at. When the stock price aligns closely with the GF Value Line, as it does with Calumet Specialty Products Partners LP at $14.25 per share, it suggests that the stock is fairly valued. Therefore, the expected long-term return should be commensurate with the company's growth rate.
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Financial Strength
Before investing, one must evaluate the financial strength of a company. Calumet Specialty Products Partners LP's financial strength is rated 3 out of 10, indicating a weaker position, with a cash-to-debt ratio of 0.02. This ratio is lower than 92.77% of companies in the Oil & Gas industry, highlighting a higher risk of permanent loss.
Profitability and Growth
Profitability is a critical aspect of a company's long-term success. Calumet Specialty Products Partners LP has shown profitability in 1 out of the past 10 years, with a modest operating margin of 2.9%, ranking below 64.13% of its industry peers. The company's profitability rank is 4 out of 10, which suggests a poor performance in this area. Growth is equally important; Calumet Specialty Products Partners LP's annual revenue growth of 10.2% is below industry median, and its 3-year average EBITDA growth rate of -19.7% ranks lower than 85.89% of the companies in the Oil & Gas industry.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) helps gauge profitability. Calumet Specialty Products Partners LP's ROIC of 4.91 is lower than its WACC of 10.84, indicating the company may not be generating sufficient returns on its investments.
Conclusion
Overall, Calumet Specialty Products Partners LP (CLMT, Financial) is assessed as fairly valued. Despite this, the company faces significant challenges with poor financial health and profitability, and its growth prospects are less promising compared to industry counterparts. For a detailed exploration of Calumet Specialty Products Partners LP's financials, interested parties can view 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.
