Today, we delve into the valuation of Corteva Inc (CTVA, Financial), which has seen a daily loss of 1.77% and a three-month loss of 7.9%. Despite these losses, the company has reported Earnings Per Share (EPS) (EPS) of 1.29. This analysis aims to answer whether Corteva is modestly undervalued and what this means for potential investors. Let's dive into an in-depth valuation analysis of Corteva.
About Corteva Inc
Corteva Inc (CTVA, Financial), an agricultural pure play, was formed in 2019 following its spin-off from DowDuPont. As a leader in the development of new seed and crop chemicals products, Corteva's profits are almost equally split between seeds and crop protection chemicals. Although it operates globally, about half of its revenue comes from North America. With a stock price of $52.43, the company boasts a market cap of $37.20 billion.
Understanding Corteva's GF Value
The GF Value represents the current intrinsic value of a stock, derived from our exclusive method. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded. This value is calculated based on historical multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and future business performance estimates.
Corteva's stock shows signs of being modestly undervalued based on the GuruFocus Value calculation. The GF Value Line indicates that the stock is trading below its fair value. This suggests that the long-term return of Corteva's stock is likely to be higher than its business growth.
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Corteva's Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Hence, a company's financial strength must be carefully reviewed before deciding to buy shares. Corteva has a cash-to-debt ratio of 0.49, ranking worse than 55.32% of companies in the Agriculture industry. GuruFocus ranks Corteva's financial strength as 7 out of 10, suggesting a fair balance sheet.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability, poses less risk. Corteva has been profitable over the past 5 years. With a revenue of $17.50 billion and Earnings Per Share (EPS) of $1.29 over the past twelve months, its operating margin is 11.79%, ranking better than 63.32% of companies in the Agriculture industry. GuruFocus ranks the profitability of Corteva at 5 out of 10, indicating fair profitability.
Growth is a critical factor in the valuation of a company. Corteva's 3-year average revenue growth rate is worse than 66.51% of companies in the Agriculture industry. However, its 3-year average EBITDA growth rate is 25.8%, which ranks better than 55.83% of companies in the Agriculture industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC) can provide insights into its profitability. For the past 12 months, Corteva's ROIC is 5.5, and its WACC is 8.26.
Conclusion
Overall, Corteva (CTVA, Financial) stock shows signs of being modestly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks better than 55.83% of companies in the Agriculture industry. To learn more about Corteva stock, check out its 30-Year Financials here.
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