The stock of Grupo Aeroportuario del Centro Norte SAB de CV (NAS:OMAB, 30-year Financials) appears to be significantly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $53.29 per share and the market cap of $2.6 billion, Grupo Aeroportuario del Centro Norte SAB de CV stock is believed to be significantly overvalued. GF Value for Grupo Aeroportuario del Centro Norte SAB de CV is shown in the chart below.
Because Grupo Aeroportuario del Centro Norte SAB de CV is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have 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 company. Grupo Aeroportuario del Centro Norte SAB de CV has a cash-to-debt ratio of 0.63, which is better than 68% of the companies in Transportation industry. The overall financial strength of Grupo Aeroportuario del Centro Norte SAB de CV is 6 out of 10, which indicates that the financial strength of Grupo Aeroportuario del Centro Norte SAB de CV is fair. This is the debt and cash of Grupo Aeroportuario del Centro Norte SAB de CV over the past years:
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Grupo Aeroportuario del Centro Norte SAB de CV has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $250.5 million and earnings of $1.029 a share. Its operating margin of 32.07% better than 94% of the companies in Transportation industry. Overall, GuruFocus ranks Grupo Aeroportuario del Centro Norte SAB de CV's profitability as strong. This is the revenue and net income of Grupo Aeroportuario del Centro Norte SAB de CV over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Grupo Aeroportuario del Centro Norte SAB de CV is -8.8%, which ranks worse than 78% of the companies in Transportation industry. The 3-year average EBITDA growth rate is -13%, which ranks worse than 83% of the companies in Transportation industry.
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Return on invested capital (ROIC) measures how well a company 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 is expected to pay on average to all its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Grupo Aeroportuario del Centro Norte SAB de CV's ROIC is 8.32 while its WACC came in at 14.57. The historical ROIC vs WACC comparison of Grupo Aeroportuario del Centro Norte SAB de CV is shown below:
In conclusion, The stock of Grupo Aeroportuario del Centro Norte SAB de CV (NAS:OMAB, 30-year Financials) is believed to be significantly overvalued. The company's financial condition is fair and its profitability is strong. Its growth ranks worse than 83% of the companies in Transportation industry. To learn more about Grupo Aeroportuario del Centro Norte SAB de CV stock, you can check out its 30-year Financials here.
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