With a daily gain of 14.42%, a 3-month loss of 15.18%, and an Earnings Per Share (EPS) of 9.46, ArcBest Corp (ARCB, Financial) has sparked interest among value investors. However, the question remains: Is the stock modestly overvalued? This article delves into a comprehensive valuation analysis of ArcBest, providing insights into its financial performance and intrinsic value. Read on to unravel the true value of ArcBest.
A Snapshot of ArcBest Corp (ARCB, Financial)
ArcBest is a logistics company with a diverse business portfolio encompassing Asset-Based, ArcBest, and FleetNet segments. Despite the complexity of its operations, ArcBest has managed to maintain a steady business growth. A comparison of its stock price and the GF Value indicates that the stock might be modestly overvalued. However, a deeper exploration into its financial performance and future prospects is necessary to confirm this valuation.
Understanding the GF Value of ArcBest
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. If the stock price significantly deviates from the GF Value Line, it could indicate overvaluation or undervaluation, influencing its future returns.
For ArcBest (ARCB, Financial), the GF Value suggests that the stock might be modestly overvalued. This assessment is based on its current price of $100.68 per share and the GF Value of $90.21. Consequently, the long-term return of ArcBest stock could be lower than its business growth.
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Financial Strength of ArcBest
Investing in companies with low financial strength could lead to permanent capital loss. Therefore, understanding a company's financial strength, such as its cash-to-debt ratio and interest coverage, is crucial. ArcBest boasts a cash-to-debt ratio of 0.78, ranking better than 62.5% of companies in the Transportation industry. This strong financial position, coupled with its consistent profitability, makes ArcBest a compelling investment prospect.
Profitability and Growth of ArcBest
Profitable companies, especially those with consistent profitability and high profit margins, are typically safer investments. ArcBest has been profitable for the past 10 years, with an operating margin of 4.9%, albeit ranking lower than 62.79% of companies in the Transportation industry. However, ArcBest's average annual revenue growth of 22.7% and 3-year average EBITDA growth of 47.3% outperform the majority of its industry peers.
Comparing ROIC and WACC of ArcBest
Comparing a company's return on invested capital (ROIC) and weighted average cost of capital (WACC) offers insights into its profitability. Over the past 12 months, ArcBest's ROIC stands at 11.15, while its WACC is 12.69, indicating a need for improvement.
Conclusion
In conclusion, ArcBest (ARCB, Financial) appears to be modestly overvalued. Despite its strong financial condition and profitability, the stock's long-term return may be lower than its business growth. For a deeper understanding of ArcBest's financial performance, check out its 30-Year Financials here.
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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.
