The stock of Bollore SA (OTCPK:BOIVF, 30-year Financials) appears to be modestly undervalued, 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 $5.08 per share and the market cap of $15 billion, Bollore SA stock shows every sign of being modestly undervalued. GF Value for Bollore SA is shown in the chart below.
Because Bollore SA is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth, which averaged 34.5% over the past three years and is estimated to grow 5.48% annually over the next three to five years.
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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. Bollore SA has a cash-to-debt ratio of 0.35, which is worse than 70% of the companies in the industry of Media - Diversified. The overall financial strength of Bollore SA is 4 out of 10, which indicates that the financial strength of Bollore SA is poor. This is the debt and cash of Bollore SA over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. Bollore SA has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $27.6 billion and earnings of $0.101 a share. Its operating margin is 5.12%, which ranks in the middle range of the companies in the industry of Media - Diversified. Overall, the profitability of Bollore SA is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Bollore SA 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 Bollore SA is 34.5%, which ranks better than 93% of the companies in the industry of Media - Diversified. The 3-year average EBITDA growth rate is 37.5%, which ranks better than 85% of the companies in the industry of Media - Diversified.
Another way to evaluate 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) 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 ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Bollore SA's ROIC was 2.49, while its WACC came in at 3.04. The historical ROIC vs WACC comparison of Bollore SA is shown below:
In summary, the stock of Bollore SA (OTCPK:BOIVF, 30-year Financials) appears to be modestly undervalued. The company's financial condition is poor and its profitability is fair. Its growth ranks better than 85% of the companies in the industry of Media - Diversified. To learn more about Bollore SA stock, you can check out its 30-year Financials here.
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