Himax Technologies Stock Appea – GuruFocus.com
Himax Technologies (NAS: HIMX, 30-year-old Financials) stock is showing all signs of significant overvaluation, according to the GuruFocus stock 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, the company’s past growth, and analysts’ estimates of the company’s future performance. If a stock’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 $ 13.78 per share and market cap of $ 2.4 billion, Himax Technologies stock gives any indication of being significantly overvalued. The GF value for Himax Technologies is shown in the table below.
Because Himax Technologies is significantly overvalued, its long-term stock return is likely to be much lower than the future growth of its business, which has averaged 8.8% over the past five years.
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Since investing in companies with poor financial strength could result in a permanent loss of capital, investors should carefully consider the financial strength of a company before deciding whether or not to buy shares. Examining the cash-to-debt ratio and interest coverage can provide a good initial perspective on the financial strength of the business. Himax Technologies has a cash-to-debt ratio of 1.53, which ranks in the average for companies in the semiconductor industry. Based on this, GuruFocus ranks Himax Technologies’ financial strength at 7 out of 10, which suggests a fair track record. Here is Himax Technologies’ debt and cash flow over the past few years:
Companies that have historically been profitable over the long term pose less risk to investors who want to buy stocks. Higher profit margins usually dictate a better investment compared to a business with lower profit margins. Himax Technologies has been profitable 9 in the past 10 years. In the past twelve months, the company reported sales of $ 1 billion and earnings of $ 0.635 per share. His the operating margin is 13.65%, which ranks better than 68% of companies in the semiconductor industry. Overall, Himax Technologies’ profitability is ranked 6 out of 10, indicating acceptable profitability. Here is Himax Technologies’ revenue and bottom line for the past few years:
One of the most important factors in the valuation of a business is growth. Long-term equity performance is closely linked to growth, according to GuruFocus research. Companies that grow faster create more shareholder value, especially if that growth is profitable. Himax Technologies’ average annual revenue growth of 8.8%, which ranks better than 67% of companies in the semiconductor industry. The 3-year average EBITDA growth is 19.8%, which ranks better than 66% of companies in the semiconductor industry.
Another way to assess a company’s profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). 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. If the ROIC is higher than the WACC, it indicates that the company is creating shareholder value. Over the past 12 months, Himax Technologies’ ROIC was 20.00, while its WACC was 12.20. The historical ROIC vs WACC comparison of Himax technologies is shown below:
Overall, Himax Technologies (NAS: HIMX, 30-year-old Financials) stock is estimated to be significantly overvalued. The company’s financial position is fair and its profitability is fair. Its growth ranks better than 66% of companies in the semiconductor industry. To learn more about Himax Technologies stock, you can view its 30-year financial data here.
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