Amidst a daily loss of 4.57% and a notable three-month gain of 36.82%, Masimo Corp (MASI, Financial) presents a compelling case for valuation analysis with an Earnings Per Share (EPS) of 1.63. Investors are often on the lookout for undervalued stocks that promise a high return potential, and Masimo's current market dynamics suggest a significant undervaluation. This article delves into the financial intricacies to determine whether Masimo (MASI) truly offers an attractive investment opportunity.
Company Introduction
Masimo Corp is a prominent global technology entity, operating chiefly in the healthcare sector, which is the main revenue driver. The company is renowned for its innovative noninvasive patient monitoring technologies, hospital automation solutions, and a range of consumer health products. Furthermore, Masimo's non-healthcare segment boasts a portfolio of high-end audio sound products. With a current stock price of $115.11 and a market cap of $6.10 billion, the GF Value sets the fair valuation at a much higher $261.09, indicating that Masimo may be significantly undervalued.
Summarize GF Value
The GF Value is a proprietary metric that estimates the intrinsic value of a stock, factoring in historical trading multiples, a GuruFocus adjustment based on past performance and growth, and future business performance projections. If Masimo's stock price gravitates significantly below the GF Value Line, it suggests an undervalued status with a higher potential for future returns. Masimo's current price of $115.11 per share compared to the GF Value indicates a substantial undervaluation, hinting at a promising long-term investment return that could surpass business growth.
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Financial Strength
Investors must scrutinize a company's financial strength to mitigate the risk of capital loss. Masimo's cash-to-debt ratio stands at 0.12, positioning it lower than 90.81% of its industry peers. Despite this, Masimo's overall financial strength is deemed fair with a score of 6 out of 10.
Profitability and Growth
Consistent profitability is a hallmark of a less risky investment. Masimo has maintained profitability for the last decade, with a revenue of $2.10 billion and an EPS of $1.63 over the past year. The company's operating margin of 8.17% outperforms 62.74% of its competitors, reflecting robust profitability. Additionally, Masimo's growth trajectory is impressive, with a 3-year average annual revenue growth rate of 30.9%, eclipsing 86.17% of the industry.
ROIC vs WACC
An insightful way to gauge profitability is through the comparison of Return on Invested Capital (ROIC) against the Weighted Average Cost of Capital (WACC). Masimo's ROIC over the past year stands at 5.13, while its WACC is at 9.98, indicating potential challenges in creating value for shareholders.
Conclusion
In conclusion, Masimo (MASI, Financial) appears to be significantly undervalued, with a financial condition that is fair and profitability that is strong. Its growth outpaces more than half of its competitors in the Medical Devices & Instruments industry. For a deeper understanding of Masimo's financials, one can explore 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.
