John Wiley & Sons Inc (WLY, Financial), a leading global provider of academic journals, books, and online education program management solutions, has seen a daily loss of -10.47 % and a 3-month loss of -4.23%. With a Loss Per Share of 1.06, the question arises: Is the stock significantly undervalued? This article seeks to answer this question through a comprehensive valuation analysis.
A Snapshot of John Wiley & Sons Inc (WLY, Financial)
John Wiley & Sons Inc (WLY) is a prominent global provider of academic journals, books, pre- and post-hire assessments and training, test preparation materials, and online education program management solutions. The company has reorganized its Education lines of business into two new customer-centric segments: the Academic segment and the Talent segment. With more than 85% of its total revenue derived from digital products and tech-enabled services, John Wiley & Sons Inc (WLY) stands as a significant player in the digital education landscape.
Comparing the stock price with the GF Value, an estimation of fair value, provides an initial insight into the company's value. At a current price of $31.01 per share, the GF Value of John Wiley & Sons (WLY, Financial) stands at $48.02, indicating a significant undervaluation.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line presents the fair trading value of the stock.
John Wiley & Sons (WLY, Financial) appears to be significantly undervalued based on the GF Value. If the stock price is significantly above the GF Value Line, the stock may be overvalued, leading to poor future returns. Conversely, if the stock price is significantly below the GF Value Line, the stock may be undervalued, indicating potential for higher future returns.
Considering that John Wiley & Sons (WLY, Financial) is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
Assessing Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, investors must review a company's financial strength before deciding to purchase shares. Key indicators of financial strength include the cash-to-debt ratio and interest coverage. John Wiley & Sons (WLY, Financial) has a cash-to-debt ratio of 0.07, ranking worse than 88.45% of 996 companies in the Media - Diversified industry. The overall financial strength of John Wiley & Sons is 5 out of 10, indicating fair financial strength.
Profitability and Growth
Profitable companies, especially those demonstrating consistent profitability over the long term, pose less risk for investors. John Wiley & Sons has been profitable 9 times over the past 10 years. Over the past twelve months, the company had a revenue of $2 billion and a Loss Per Share of $1.06. Its operating margin is 11.2%, ranking better than 75.12% of 1025 companies in the Media - Diversified industry. Overall, GuruFocus ranks the profitability of John Wiley & Sons at 7 out of 10, indicating fair profitability.
Growth is a crucial factor in the valuation 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 John Wiley & Sons is 3.2%, ranking better than 59.85% of 944 companies in the Media - Diversified industry. The 3-year average EBITDA growth rate is 27.4%, ranking better than 76.71% of 760 companies in the Media - Diversified industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can also evaluate its profitability. The ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. The 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 exceeds the WACC, the company is likely creating value for its shareholders. Over the past 12 months, John Wiley & Sons's ROIC was 8.15, while its WACC came in at 9.24.
Conclusion
In conclusion, the stock of John Wiley & Sons (WLY, Financial) appears to be significantly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks better than 76.71% of 760 companies in the Media - Diversified industry. To learn more about John Wiley & Sons stock, check out its 30-Year Financials here.
To find out the high quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
