Marathon Digital Holdings Inc (MARA, Financial) has recently shown a daily gain of 5.92%, yet over the past three months, the stock has experienced a marginal loss of 0.27%. With a Loss Per Share of 3.12, investors are questioning whether the stock is significantly undervalued. This article delves into a valuation analysis to determine the true value of Marathon Digital Holdings and whether its current market price reflects its intrinsic worth. Continue reading for an insightful analysis of Marathon Digital Holdings' valuation.
Company Introduction
Marathon Digital Holdings Inc focuses on the lucrative field of mining digital assets. It boasts a portfolio of cryptocurrency mining machines and operates a data center dedicated to the mining of digital assets. With its operations firmly rooted in the Digital Currency Blockchain segment, the company's crypto-currency machines are strategically located within the United States. When examining Marathon Digital Holdings, a stark contrast emerges between its current stock price of $11.41 and the GF Value of $24.89, an estimate of the stock's fair value. This discrepancy sets the stage for an in-depth valuation analysis that intertwines financial assessment with essential company details.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, meticulously calculated using a combination of historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. This proprietary method yields the GF Value Line, a benchmark suggesting the stock's ideal fair trading value. If a stock's price significantly deviates from this line, it could indicate an overvaluation or undervaluation, potentially signaling poor or higher future returns, respectively.
Marathon Digital Holdings (MARA, Financial) is currently deemed significantly undervalued according to the GF Value. This suggests that the long-term return of its stock could substantially outpace its business growth, presenting an attractive opportunity for value investors. At the present share price of $11.41, Marathon Digital Holdings appears to be a compelling investment when weighed against the GF Value's fair valuation.
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Financial Strength
Investing in companies with robust financial strength is crucial to avoid the risk of permanent capital loss. Marathon Digital Holdings' cash-to-debt ratio of 0.31 ranks lower than 79.18% of its peers in the Capital Markets industry. This figure leads GuruFocus to assign a financial strength rating of 5 out of 10, indicating a fair balance sheet. The historical data on the company's debt and cash flow further illuminates its financial situation over time.
Profitability and Growth
Long-term profitability is a key indicator of a company's risk profile and investment potential. Marathon Digital Holdings has had varied success over the past decade, with a revenue of $259.20 million in the last twelve months but a Loss Per Share of $3.12. Its operating margin of -45.13% is also lower than 82.1% of its industry counterparts. Consequently, GuruFocus ranks its profitability at 3 out of 10, reflecting poor profitability.
Regarding growth, Marathon Digital Holdings' 3-year average revenue growth rate surpasses 92.61% of the companies in the Capital Markets industry. However, its 3-year average EBITDA growth rate is -147.4%, placing it lower than 97.91% of its industry peers, indicating significant challenges in achieving profitable growth.
ROIC vs WACC
An effective way to assess a company's profitability is by comparing its Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC). The ROIC is a measure of the cash flow a company generates relative to the capital it has invested, while the WACC represents the average rate a company pays to finance its assets. Ideally, a company's ROIC should exceed its WACC, indicating value creation for shareholders. Over the past year, Marathon Digital Holdings' ROIC was -9.09%, significantly lower than its WACC of 36.53%, suggesting that the company is not generating sufficient returns on its investments.
Conclusion
In summary, Marathon Digital Holdings (MARA, Financial) is estimated to be significantly undervalued. The company's financial condition is fair, but its profitability is poor, and its growth ranks unfavorably compared to industry standards. Investors interested in a more detailed financial perspective on Marathon Digital Holdings 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.
