Marin Software Stock Is Believ
Marin Software’s stock (NAS: MRIN, 30-year-old Financials) gives all indications of being significantly overvalued, 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, 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 $ 20.29 per share and market cap of $ 222.5 million, Marin Software stock appears to be significantly overvalued. The GF value for Marin software is shown in the table below.
Given that Marin Software is significantly overvalued, the long-term return on its stock will likely be much lower than the future growth of its business.
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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. Marin Software has a cash-to-debt ratio of 1.53, which ranks among the average for companies in the software industry. The overall financial strength of Marin Software is 3 out of 10, indicating that the financial strength of Marin Software is low. Here is Marin Software’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. Marin Software has been profitable 0 for the past 10 years. In the past twelve months, the company achieved sales of $ 27.6 million and a loss of $ 1.58 per share. His the operating margin is -51.85%, which ranks lower than 84% of companies in the software industry. Overall, Marin Software’s profitability is ranked 1 in 10, indicating low profitability. Here is Marin Software’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 tied to the long-term performance of a company’s stocks. The faster a business grows, the more likely it is to create shareholder value, especially if the growth is profitable. Marin Software’s 3-year average annual revenue growth rate is -32.5%, which ranks in the bottom 10% of companies in the software industry. The 3-year average EBITDA growth rate is 18.8%, which is in line with the average for companies in the software industry.
Another way to determine a company’s profitability is to compare its return on invested capital to the weighted average 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. When the ROIC is higher than the WACC, it implies that the company creates value for the shareholders. Over the past 12 months, Marin Software’s ROI is -48.73 and its cost of capital is -0.19. Marin Software’s historical ROIC vs WACC comparison is shown below:
Overall, Marin Software’s stock (NAS: MRIN, 30-year-old Financials) is viewed as significantly overvalued. The company’s financial situation is bad and its profitability is bad. Its growth is in the mid-range of companies in the software industry. To learn more about Marin Software’s stock, you can view its 30-year financial data here.
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