Digital Ally Stock shows each
Digital Ally’s stock (NAS: DGLY, 30-year-old Financials) is showing all signs of significant overvaluation, according to GuruFocus Value’s calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, past business growth, and analysts’ estimates of future business performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 2.12 per share and market cap of $ 109.2 million, Digital Ally stock would be significantly overvalued. The GF value for Digital Ally is shown in the table below.
Since Digital Ally is significantly overvalued, its long-term stock return is likely to be much lower than its future business growth.
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Companies with poor financial strength present investors with a high risk of permanent capital loss. To avoid a permanent loss of capital, an investor should do his research and consider the financial strength of a company before deciding to buy stocks. Both cash-to-debt ratio and covering a company’s interests are a great way to understand its financial strength. Digital Ally has a cash-to-debt ratio of 68.87, which ranks better than 87% of companies in the business services industry. Digital Ally’s overall financial strength is 6 out of 10, indicating that Digital Ally’s financial strength is fair. Here is Digital Ally’s debt and cash flow over the past few years:
It is less risky to invest in profitable companies, especially those whose profitability is constant over the long term. A business with high profit margins is generally a safer investment than one with low profit margins. Digital Ally has been profitable 0 for the past 10 years. In the past twelve months, the company reported sales of $ 10.6 million and earnings of $ 0.48 per share. His the operating margin is -80.96%, which ranks in the bottom 10% of companies in the business services sector. Overall, Digital Ally’s profitability is ranked 1 in 10, indicating low profitability. Here is Digital Ally’s revenue and bottom line for the past few years:
Growth is probably the most important factor in the valuation of a business. GuruFocus research has shown that growth is closely linked to a company’s long-term market performance. A faster growing business creates more shareholder value, especially if the growth is profitable. Digital Ally’s 3-year average annual revenue growth is -38.5%, which ranks in the bottom 10% of companies in the business services industry. The 3-year average EBITDA growth rate is 60.9%, which ranks better than 95% of companies in the business service industry.
Another way to look at the profitability of a business is to compare its return on invested capital and the weighted cost of capital. Return on invested capital (ROIC) The extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay on average to all its security holders to finance its assets. We want to have a return on invested capital greater than the weighted cost of capital. Over the past 12 months, Digital Ally’s ROI is -60.00 and its cost of capital is 6.21.
In conclusion, the action of Digital Ally (NAS: DGLY, 30 years Financials) gives all indications of a significant overvaluation. The financial situation of the company is fair and its profitability is poor. Its growth ranks better than 95% of companies in the business service sector. To learn more about the Digital Ally share, you can view its 30-year financial data here.
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