IES Holdings Inc (IESC, Financial) recently showcased a significant daily gain of 9.25% and has experienced a 12.72% increase over the past three months. With an Earnings Per Share (EPS) of $3.59, investors are keenly observing its market movements. However, the pressing question remains: Is IES Holdings modestly overvalued? This article delves into a comprehensive valuation analysis to explore the true worth of IES Holdings (IESC).
Company Overview
IES Holdings Inc (IESC, Financial) operates through its subsidiaries, focusing on the design and installation of integrated electrical and technology systems, along with providing infrastructure products and services. The company's primary revenue is generated from its Residential segment, which offers a range of services from electrical and HVAC installation to residential solar power solutions. With a current stock price of $81.61 and a GF Value of $65.5, IES Holdings presents an interesting case for valuation. This comparison sets the stage for a deeper investigation into whether the stock is trading at a fair market value.
Understanding GF Value
The GF Value is a unique intrinsic value metric developed by GuruFocus, which reflects what a stock's fair trading price should be. It is derived from historical trading multiples, an adjustment factor based on the company's past performance and growth, and future business estimates. When a stock trades significantly above this line, it is considered overvalued, and its future return may be lower. In contrast, a stock priced well below the GF Value Line could indicate a higher future return. Currently, IES Holdings (IESC, Financial) is positioned as modestly overvalued, with a market cap of $1.60 billion, suggesting that investors may see a lower return than the company's growth rate.
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Financial Strength
Investing in companies with solid financial strength is crucial to minimize the risk of capital loss. IES Holdings boasts a cash-to-debt ratio of 1.23, outperforming 63.13% of its peers in the Construction industry. With a financial strength rank of 8 out of 10 from GuruFocus, IES Holdings stands out as financially robust.
Profitability and Growth
Profitable companies like IES Holdings, which has maintained profitability for 9 out of the past 10 years, tend to be less risky investments. IES Holdings has not only shown consistent profitability but also impressive growth rates. The company's revenue growth of 27.3% outperforms 90.68% of its industry counterparts, with a 3-year average EBITDA growth of 46.7%, ranking higher than 90.98% of companies in the Construction industry.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is an effective way to gauge profitability. IES Holdings has an impressive ROIC of 17.12%, which exceeds its WACC of 11.75%, indicating the company is generating value for its shareholders.
Conclusion
In conclusion, while IES Holdings (IESC, Financial) appears to be modestly overvalued, its strong financial condition and robust profitability signal a company with solid foundations. Its growth ranks commendably high in the Construction industry. For a detailed look at IES Holdings' financials, interested investors can review 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.
