MillerKnoll Inc (MLKN, Financial) has recently experienced a daily loss of 3.1%, yet it boasts a significant three-month gain of 39.1%. With an Earnings Per Share (EPS) of $0.68, investors are contemplating whether the stock is modestly undervalued. This article delves into the valuation analysis of MillerKnoll (MLKN), encouraging readers to explore the comprehensive financial assessment that follows.
Company Introduction
MillerKnoll Inc, a global leader in interior furnishings, has a rich heritage in design and manufacturing. With a diverse portfolio that spans across Americas Contract, International Contract & Specialty International & Specialty, and Global Retail segments, the company has established a robust presence in the market. The current stock price of $28.1, alongside a market cap of $2.10 billion, suggests a potential undervaluation when compared to the GF Value of $33.65, an estimation of the stock's fair value. This sets the stage for an in-depth evaluation of MillerKnoll's intrinsic value.
Understanding the GF Value
The GF Value is an exclusive metric used to determine the intrinsic value of a stock. It incorporates historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. If a stock's price is significantly above this line, it may be overvalued, whereas a price below suggests a stock could be undervalued, potentially offering higher future returns. MillerKnoll's current price indicates that it may be modestly undervalued, presenting an attractive opportunity for long-term investors.
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Financial Strength Assessment
Investing in companies with robust financial strength minimizes the risk of capital loss. MillerKnoll's cash-to-debt ratio of 0.12, although lower than many of its industry peers, still reflects a fair financial position with a GuruFocus rank of 5 out of 10. Understanding this aspect of the company's financial health is crucial for investors.
Profitability and Growth Insights
Consistent profitability is a telltale sign of a less risky investment. MillerKnoll, with a decade of profitability and an operating margin of 4.89%, holds a fair profitability rank of 7 out of 10. The company's growth trajectory is also impressive, with an average annual revenue growth rate of 8.4%, outpacing 64.82% of its industry counterparts. Furthermore, its 3-year average EBITDA growth rate of 40.1% is noteworthy, ranking higher than 88.79% of the industry.
ROIC vs. WACC: A Profitability Indicator
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) gives insight into a company's value creation. MillerKnoll's ROIC of 4.76 versus its WACC of 8.12 suggests that it may not be generating sufficient returns on its capital investments. This comparison is an essential factor for potential investors to consider.
Conclusion
In conclusion, MillerKnoll (MLKN, Financial) appears to be modestly undervalued, with fair financial health and profitability. Its growth outshines a significant portion of the industry, indicating potential for above-average returns. For a more detailed financial overview, MillerKnoll's 30-Year Financials can be explored 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.
