Ocean Bio-Chem Stock Is Believ
The stock of Ocean Bio-Chem (NAS: OBCI, 30-year financials) is showing all signs of significant overvaluation, according to the GuruFocus value 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 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 $ 12.0579 per share and market cap of $ 114.3 million, Ocean Bio-Chem stock is showing all signs of significant overvaluation. The GF value for Ocean Bio-Chem is shown in the table below.
Because Ocean Bio-Chem is significantly overvalued, its long-term stock return is likely to be much lower than its future business growth, which has averaged 12.7% over the past five years.
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It is always important to check the financial strength of a company before buying its shares. Investing in companies with low financial strength presents a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a business. Ocean Bio-Chem has a cash-to-debt ratio of 2.56, which is better than 75% of companies in the conglomerate sector. The overall financial strength of Ocean Bio-Chem is 8 out of 10, indicating that the financial strength of Ocean Bio-Chem is strong. Here is Ocean Bio-Chem’s 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. Ocean Bio-Chem has been profitable 10 in the past 10 years. In the past twelve months, the company achieved sales of $ 60.9 million and earnings of $ 1.15 per share. His the operating margin is 22.90%, which ranks better than 91% of companies in the conglomerate industry. Overall, Ocean Bio-Chem’s profitability is ranked 8 out of 10, indicating strong profitability. Here is Ocean Bio-Chem’s turnover and net result over the past few years:
Growth is probably one of the most important factors 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. If a company’s business is growing, the company typically creates value for its shareholders, especially if the growth is profitable. Likewise, if the income and profits of a business decrease, the value of the business will decrease. Ocean Bio-Chem’s average revenue growth rate over 3 years is over 81% for companies in the conglomerate sector. Ocean Bio-Chem’s 3-year average EBITDA growth rate is 42.7%, which ranks better than 92% of companies in the conglomerate sector.
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, Ocean Bio-Chem’s ROIC was 31.96, while its WACC was 3.54. Ocean Bio-Chem’s historical ROIC vs WACC comparison is shown below:
In conclusion, the share of Ocean Bio-Chem (NAS: OBCI, financial data at 30 years) is estimated to be considerably overvalued. The company’s financial position is solid and its profitability is solid. Its growth ranks better than 92% of companies in the conglomerate industry. To learn more about the Ocean Bio-Chem share, you can view its 30-year financial data here.
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