Marathon Digital Holdings Inc (MARA, Financial) has recently shown an impressive daily gain of 8.19% and a noteworthy 3-month gain of 53.8%. Despite these gains, the company reports a Loss Per Share of $3.12. Investors are now faced with the critical question: is Marathon Digital Holdings significantly undervalued? This article delves into the company's valuation to provide an informed perspective.
Company Introduction
Marathon Digital Holdings focuses on mining digital assets, owning cryptocurrency mining machines and a data center dedicated to this purpose. Operating primarily in the Digital Currency Blockchain segment, the company's operations are based in the United States. When comparing Marathon Digital Holdings' stock price of $16.78 to the GF Value of $25.5, a discrepancy emerges, suggesting that the stock might be significantly undervalued. This valuation gap sets the stage for an in-depth analysis of the company's intrinsic value.
Summarize GF Value
The GF Value is a unique measure of intrinsic value, factoring in historical trading multiples, a GuruFocus adjustment for past performance and growth, and estimates of future business performance. This GF Value Line represents the stock's fair trading value. When the stock price is significantly below this line, as it is with Marathon Digital Holdings (MARA, Financial), the stock is considered undervalued, indicating a potential for higher future returns. With a market cap of $3.70 billion, Marathon Digital Holdings appears to be a candidate for significant undervaluation.
Because Marathon Digital Holdings is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength
Assessing a company's financial strength is crucial before investing. Marathon Digital Holdings' cash-to-debt ratio of 0.31 places it below 78.52% of its peers in the Capital Markets industry, signaling a higher risk of permanent loss. However, its financial strength score of 6 out of 10 suggests that the company's financial condition is fair.
Profitability and Growth
Profitability is a key indicator of a company's long-term viability. Marathon Digital Holdings, however, has faced challenges, with an operating margin of -45.13%, ranking lower than 82.33% of its industry counterparts. The company's profitability rank is 3 out of 10, reflecting poor performance.
Regarding growth, Marathon Digital Holdings has seen an impressive 3-year average annual revenue growth rate of 80%, outperforming 92.64% of the industry. However, its 3-year average EBITDA growth rate is a concerning -147.4%, ranking it lower than 97.92% of its peers.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) provides insight into a company's profitability relative to its capital costs. Marathon Digital Holdings' ROIC of -9.09 is less than its WACC of 31.75, indicating that the company is not generating sufficient returns on its investments.
Conclusion
In conclusion, Marathon Digital Holdings (MARA, Financial) is believed to be significantly undervalued. The company's financial condition is fair, but its profitability is poor, and its growth ranks unfavorably within the Capital Markets industry. For a more detailed financial overview, you can explore Marathon Digital Holdings' 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.
