Today's trading session saw Cimpress PLC (CMPR, Financial) experience a decrease of 4.61%, continuing a three-month downtrend with a loss of 4.43%. Despite these fluctuations, the company reports an Earnings Per Share (EPS) of 3.27. This leads us to question: is Cimpress PLC modestly overvalued? The following analysis delves into the company's valuation, encouraging investors to explore further.
Company Overview
Cimpress PLC invests in and builds customer-focused, entrepreneurial, mass-customization businesses aimed at long-term success. The company's approach to mass customization strives to meet individual customer needs with near mass production efficiency. Its segments include Vista, PrintBrothers, The Print Group, and National Pen, among others, with Vista generating the maximum revenue. Currently, Cimpress PLC's stock price stands at $84.25, with a market cap of $2.10 billion, juxtaposed against a GF Value of $72.36, suggesting a modest overvaluation.
Understanding GF Value
The GF Value is a proprietary measure reflecting the true intrinsic value of a stock, calculated through a unique methodology. This valuation considers historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and estimated future business performance. According to our analysis, Cimpress PLC's current stock price exceeds its GF Value, classifying it as modestly overvalued. This positioning suggests that the stock might yield lower returns relative to its business growth in the long term.
Financial Strength and Stability
When considering an investment, the financial health of a company is paramount. Cimpress PLC's cash-to-debt ratio stands at 0.09, placing it lower than 87.49% of its peers in the Media - Diversified industry. This low ratio, coupled with a financial strength rating of 4 out of 10, signals a potential risk for investors due to the company's weaker financial position.
Profitability and Growth Prospects
Cimpress PLC has maintained profitability over the past decade, with an operating margin of 7.43%, ranking better than 65.77% of its industry counterparts. The company's revenue over the past twelve months was $3.20 billion, with consistent growth metrics. However, its 3-year average EBITDA growth rate at 1.6% is below industry average, which might concern growth-focused investors.
ROIC vs. WACC: A Critical Comparison
A crucial aspect of assessing a company's profitability is comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). Cimpress PLC's ROIC is currently 10, slightly above its WACC of 9.56, indicating the company is creating value, albeit marginally. This comparison is vital for understanding the efficiency of capital utilization relative to its cost.
Conclusion
In summary, while Cimpress PLC (CMPR, Financial) displays a fair level of profitability and has maintained a steady growth trajectory, its current market valuation suggests it is modestly overvalued. Potential investors should weigh the financial health risks and modest value creation before making investment decisions. For a deeper dive into Cimpress PLC's financials, visit the 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.
