Stoc document security systems – GuruFocus.com
The stock of document security systems (AMEX: DSS, 30 year financial data) shows all the signs of a fair valuation, 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 $ 1.5 per share and market capitalization of $ 101.4 million, Document Security Systems stock gives all indications of fair value. The GF value for document security systems is shown in the table below.
Since Document Security Systems is valued at fair value, its long-term stock return is likely to be close to the growth rate 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. Document Security Systems has a cash-to-debt ratio of 22.49, which ranks better than 83% of companies in the business services industry. The overall financial strength of document security systems is 7 out of 10, indicating that the financial strength of document security systems is fair. Here is Document Security Systems’ debt and cash flow for the past several years:
It is less risky to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A business with high profit margins is also generally a safer investment than a business with low profit margins. Document Security Systems has been profitable 3 in the past 10 years. In the past twelve months, the company achieved sales of $ 18.1 million and earnings of $ 0.031 per share. His the operating margin is -71.99%, which ranks in the bottom 10% of companies in the business services sector. Overall, GuruFocus ranks the profitability of document security systems at 2 out of 10, indicating low profitability. Here is Document Security Systems’ 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. Document Security Systems’ 3-year average annual revenue growth is -57.9%, which ranks among the bottom 10% of companies in the business services industry. The 3-year average EBITDA growth rate is -41.6%, which ranks in the bottom 10% of companies in the business services industry.
Another way to look at a company’s profitability 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 of 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, Document Security Systems’ return on invested capital is 1.07 and its cost of capital is 12.41. The historical ROIC vs WACC comparison of document security systems is shown below:
To conclude, the Document Security Systems share (AMEX: DSS, 30 years Financials) gives all indications of a fair value. The financial situation of the company is fair and its profitability is poor. Its growth ranks in the bottom 10% of companies in the business services sector. To learn more about Document Security Systems’ stock, you can view its 30-year financial data here.
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