Shares of Vista Outdoor (VSTO, Financial) surged by 10.14% today, buoyed by the company's announcements of two significant business deals. Vista Outdoor has entered into an agreement to sell its Revelyst business to Strategic Value Partners for $1.125 billion, and it has amended its agreement with the Czechoslovak Group, raising the acquisition price for The Kinetic Group to $2.225 billion.
Vista Outdoor (VSTO, Financial), listed on the NYSE, currently trades at a price of $43.88 with a market capitalization of $2.56 billion. While the stock has demonstrated significant price momentum, with a 12-week change of 18.42% and a year-to-date increase of 48.29%, investors should be aware of its financial metrics. The company exhibits a Price-to-Book (P/B) ratio of 2.16 and a Price-to-Sales (P/S) ratio of 0.94, both of which are near their two-year highs. Meanwhile, the stock's GF Value indicates that it is significantly overvalued, with a GF Value estimate of $28.23. More details on VSTO's GF Value can be found here.
Despite the promising deals, Vista Outdoor (VSTO, Financial) faces some financial challenges. The company's Altman Z-score of 2.62 falls within the grey area, suggesting potential financial stress. Additionally, Vista Outdoor has been less capital efficient, as indicated by its Return on Invested Capital (ROIC) being lower than its Weighted Average Cost of Capital (WACC).
On the brighter side, Vista Outdoor (VSTO, Financial) benefits from a strong operating margin, which is currently expanding. Furthermore, its Beneish M-Score suggests that the company is unlikely to be engaging in financial manipulation, which is a positive indicator for investor confidence.
As the company recalibrates its business strategy through these significant transactions, investors should keep a close eye on Vista Outdoor (VSTO, Financial)'s financial health and market performance, particularly given its ambitious valuation in the context of its intrinsic value and the broader market dynamics.
