With a striking daily gain of 6.84% and a three-month surge of 102.41%, Aspen Aerogels Inc (ASPN, Financial) has caught the attention of many investors. However, amidst this impressive performance, the company has reported a Loss Per Share of $0.85. A critical question arises for value investors: Is Aspen Aerogels significantly overvalued? The following analysis delves into the valuation of Aspen Aerogels, providing insights that investors may find essential.
Company Overview
Aspen Aerogels Inc is a pioneer in aerogel technology, with its products serving diverse markets such as energy infrastructure, building materials, and electric vehicles. The company's commitment to innovation is also supported by funding from U.S. government agencies. Despite a current share price of $17.19, the GF Value suggests a fair value of only $11.5, indicating a potential overvaluation. This discrepancy sets the stage for an in-depth evaluation of the company's true market value.
Understanding GF Value
The GF Value is a unique metric that gauges the intrinsic value of a stock by considering historical trading multiples, a GuruFocus adjustment factor, and future business performance forecasts. When a stock's price significantly exceeds the GF Value Line, it may be overvalued, which could lead to disappointing future returns. Conversely, a price below the GF Value Line might indicate undervaluation and the potential for higher returns. Currently, with a price of $17.19 per share, Aspen Aerogels (ASPN, Financial) seems to be significantly overvalued according to our GF Value estimation.
Financial Strength
It is crucial to assess a company's financial strength before investing. Aspen Aerogels' cash-to-debt ratio of 0.7, although modest, is better than over half of its peers in the Construction industry. The company's overall financial strength score is 6 out of 10, suggesting a fair financial position. Below is a visual representation of Aspen Aerogels' debt and cash over recent years.
Profitability and Growth
Aspen Aerogels has faced challenges in maintaining profitability, with no profitable years in the past decade. The company reported a Loss Per Share of $0.85 and an operating margin of -28.14%, which is lower than the majority of its industry counterparts. Moreover, Aspen Aerogels' growth rates have been less than impressive, further impacting its valuation negatively.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) provides insight into its value creation efficiency. Unfortunately for Aspen Aerogels, its ROIC of -16.63 is lower than its WACC of 16.81, indicating that the company may not be generating sufficient returns on its investments.
Conclusion
In conclusion, Aspen Aerogels (ASPN, Financial) appears to be significantly overvalued when considering its current market price against the GF Value. The company's fair financial condition juxtaposed with its poor profitability and disappointing growth rates suggests caution for investors. For a more comprehensive understanding of Aspen Aerogels' financials, 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.
