IES Holdings Inc (IESC, Financial) has recently shown a notable daily gain of 9.25%, adding to a 3-month gain of 12.72%. With an Earnings Per Share (EPS) of $3.59, investors are keenly observing its stock performance. However, the pressing question remains: is IES Holdings modestly overvalued? This valuation analysis aims to shed light on the company's intrinsic value, guiding investors through a comprehensive financial examination.
Company Introduction
IES Holdings Inc (IESC, Financial) operates a diversified portfolio of subsidiaries, specializing in the design, installation, and maintenance of integrated electrical and technology systems, along with providing a broad range of infrastructure products and services. The company's segments cater to a vast clientele, from large corporations to residential complexes. With a current stock price of $81.61 and a market cap of $1.70 billion, juxtaposed against a GF Value of $68.24, a detailed valuation is imperative to understand whether IES Holdings' stock stands at a fair market value or if it deviates from its intrinsic worth.
Summarize GF Value
The GF Value is a unique metric that assesses the inherent value of a stock. It incorporates historical trading multiples, an adjustment factor for past performance, and projected business outcomes. When the stock price significantly surpasses the GF Value Line, it might indicate overvaluation, suggesting a potential downturn in future returns. Conversely, a price below the GF Value Line could signal undervaluation and potentially higher future returns. At present, IES Holdings (IESC, Financial) appears modestly overvalued, suggesting that its long-term stock return might lag behind its business growth.
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Financial Strength
Before investing, evaluating a company's financial strength is crucial to mitigate the risk of permanent loss. IES Holdings boasts a cash-to-debt ratio of 0.79, outperforming 55.58% of its industry peers. With a strong financial strength rating of 8 out of 10, IES Holdings demonstrates robust financial health, positioning itself as a strong contender for investment consideration.
Profitability and Growth
Investing in profitable companies, especially those with a history of consistent profitability, typically carries less risk. IES Holdings has been profitable for 8 out of the past 10 years, with a revenue of $2.30 billion and an Earnings Per Share (EPS) of $3.59 over the last twelve months. Its operating margin stands at 5.02%, reflecting a competitive position in the market. The company's profitability rank is a strong 8 out of 10, while its growth has outperformed 72.33% of the industry, showcasing its potential for value creation.
ROIC vs WACC
An effective way to measure a company's profitability is by comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). IES Holdings' ROIC of 14.28 surpasses its WACC of 11.59, indicating the company is generating value for its shareholders. This positive spread suggests that IES Holdings is efficiently allocating capital towards profitable investments.
Conclusion
In summary, while IES Holdings (IESC, Financial) is deemed modestly overvalued, its financial condition and profitability are robust, and its growth rate is commendable within the Construction industry. For a deeper understanding of IES Holdings' financial journey, investors are encouraged to explore 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.
