Tecnoglass Inc (TGLS, Financial) recently experienced a daily loss of 3.89%, yet it shows a negligible gain of 0.02% over the past three months. With an Earnings Per Share (EPS) of 4.23, investors are keen to determine if the stock is modestly undervalued. This valuation analysis aims to answer that pressing question and provide a clear understanding of Tecnoglass's current market position.
Company Introduction
Tecnoglass Inc designs, manufactures, and markets a variety of architectural glass and windows, with a significant presence in the United States. The company's portfolio includes products such as tempered, laminated, and insulating glass, which are integral to modern architectural designs. The stock price of Tecnoglass (TGLS, Financial) is currently at $34.3 per share, with a market cap of $1.60 billion. When compared to the GF Value of $39.77, which estimates the stock's fair value, it appears that Tecnoglass may be modestly undervalued. The company's financial and operational metrics, including a robust operating margin of 34.93% and a Return on Invested Capital (ROIC) of 34.47%, further support this observation.
Summarize GF Value
The GF Value is a unique metric that assesses the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. Tecnoglass (TGLS, Financial) is currently trading below the GF Value Line, suggesting that it is modestly undervalued. This could indicate that the stock has a higher potential for long-term returns compared to its business growth.
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Financial Strength
Investing in companies with solid financial strength is crucial to reduce the risk of capital loss. Tecnoglass's financial strength is commendable, with a cash-to-debt ratio of 0.72, surpassing 57.22% of its industry peers. The company's overall financial strength has been rated a strong 8 out of 10 by GuruFocus.
Profitability and Growth
Companies with consistent profitability are generally considered less risky investments. Tecnoglass has shown profitability for 8 out of the past 10 years, with impressive revenues of $849.80 million and an operating margin that outperforms 98.11% of the Building Materials industry. The company's growth rates are also notable, with a 3-year average revenue growth better than 80.11% and a 3-year average EBITDA growth rate of 42.9%, ranking higher than 88.75% of its industry counterparts.
ROIC vs WACC
An effective way to measure a company's profitability is by comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). A higher ROIC than WACC suggests that the company is creating value for its shareholders. Tecnoglass's ROIC stands at a robust 34.47, well above its WACC of 23.05.
Conclusion
In conclusion, Tecnoglass Inc (TGLS, Financial) appears to be modestly undervalued, with strong financial health and profitability. Its growth outpaces a majority of its industry, indicating potential for future value creation. For a deeper dive into Tecnoglass's financials, interested investors can explore the company's 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.
