Bluegreen Vacations Holding Corp (BVH, Financial) recently experienced a significant daily gain of 106.78% and a 3-month gain of 108.77%. With an Earnings Per Share (EPS) of 3.65, the stock appears to be significantly overvalued. But is it really? This article aims to provide a comprehensive analysis of Bluegreen Vacations Holding's valuation and financial performance to answer this question.
Company Overview
Bluegreen Vacations Holding Corp is a reputable vacation ownership company that specializes in marketing and selling vacation ownership interests (VOIs). The company manages resorts in popular leisure and urban destinations. Operating in two segments: Sales of VOIs and financing & Resort Operations and Club Management, the majority of its revenue is generated from the Sales of VOIs and financing segment. With a current stock price of $73.45, Bluegreen Vacations Holding has a market cap of $1.20 billion, which suggests that the stock is significantly overvalued.
Understanding the GF Value
The GF Value is a proprietary valuation method used to determine the intrinsic value of a stock. It considers historical multiples, an internal adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line, displayed on our summary page, represents the fair value at which the stock should ideally be traded. If a stock's price significantly exceeds the GF Value Line, it is considered overvalued and is likely to yield poor future returns. Conversely, if the price is significantly below the GF Value Line, the stock is undervalued and is expected to yield higher future returns.
Based on our GF Value estimation, Bluegreen Vacations Holding appears significantly overvalued. With its current price of $73.45 per share and a market cap of $1.20 billion, the stock's future return is likely to be much lower than its future business growth.
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Examining Financial Strength
It is crucial to assess the financial strength of a company before investing in its stock. Companies with poor financial strength pose a higher risk of permanent loss. The cash-to-debt ratio and interest coverage provide valuable insights into a company's financial strength. Bluegreen Vacations Holding has a cash-to-debt ratio of 0.19, which is worse than 69.35% of 819 companies in the Travel & Leisure industry. This indicates that the company's financial strength is poor.
Profitability and Growth
Investing in profitable companies, especially those with consistent long-term profitability, is less risky. A company with high profit margins is usually a safer investment than those with low profit margins. Bluegreen Vacations Holding has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $849.80 million and Earnings Per Share (EPS) of $3.65. Its operating margin is 5.74%, which ranks worse than 52.98% of 821 companies in the Travel & Leisure industry. Overall, the profitability of Bluegreen Vacations Holding is fair.
Growth is closely correlated with the long-term performance of a company's stock. Bluegreen Vacations Holding's 3-year average revenue growth rate is better than 65.45% of 767 companies in the Travel & Leisure industry. Bluegreen Vacations Holding's 3-year average EBITDA growth rate is 25.2%, which ranks better than 75.57% of 610 companies in the Travel & Leisure industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another effective way to evaluate its profitability. ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. 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, Bluegreen Vacations Holding's ROIC was 3.45, while its WACC came in at 9.42.
Conclusion
In conclusion, Bluegreen Vacations Holding appears to be significantly overvalued. The company's financial condition is poor, and its profitability is fair. However, its growth ranks better than 75.57% of 610 companies in the Travel & Leisure industry. To learn more about Bluegreen Vacations Holding stock, you can 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.
