PLDT Inc (PHI, Financial) recently experienced a daily loss of 1.39%, yet it boasts an impressive 3-month gain of 18.22%. With an Earnings Per Share (EPS) of $0.9, investors are keen to understand whether the stock is modestly undervalued. This article delves into the valuation analysis of PLDT (PHI), guiding readers through a thorough examination of its intrinsic value and market performance.
Company Introduction
PLDT Inc is the leading telecommunications carrier in the Philippines, with a dominant presence in both fixed-line and wireless markets. Owned in part by First Pacific and Nippon Telegraph and Telephone, PLDT's influence in the industry is substantial. Comparing the current stock price of $23.42 to the GF Value of $26.6 provides a glimpse into the potential undervaluation of the company. This valuation serves as a cornerstone for a deeper analysis of PLDT's financial health and market position.
Summarize GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, factoring in historical trading multiples, a GuruFocus adjustment, and future business performance projections. PLDT (PHI, Financial) appears modestly undervalued according to this measure. The GF Value suggests that PLDT's market cap of $5.10 billion may not fully reflect its fair trading value, pointing to a potential upside for investors.
Because PLDT is relatively undervalued, the long-term return of its stock is likely to outpace its business growth, presenting an attractive opportunity for value investors.
Financial Strength
Assessing a company's financial strength is crucial before investing. PLDT's cash-to-debt ratio of 0.07 is lower than industry peers, indicating potential financial risk. With a financial strength rating of 3 out of 10, PLDT's financial foundation may require scrutiny.
Profitability and Growth
Investing in profitable companies is generally less risky, and PLDT's consistent profitability over the past decade is a testament to its stability. With an operating margin of 11.83%, PLDT ranks well within the telecommunications sector. Its profitability rank of 8 out of 10 reflects a strong financial performance.
Growth is a vital factor in valuation, and PLDT's 3-year average revenue growth rate outperforms over 64% of its industry counterparts. Similarly, its EBITDA growth rate of 15.2% is higher than 71.6% of companies in the same sector, signaling robust growth prospects.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) provides insight into its profitability relative to its capital costs. PLDT's ROIC of 2.87 is currently below its WACC of 5, suggesting that the company may not be generating sufficient returns on its investments.
Conclusion
In conclusion, PLDT (PHI, Financial) is identified as modestly undervalued based on the GF Value. Despite its poor financial condition, PLDT's profitability remains strong, and its growth prospects are promising. Investors interested in PLDT can further explore the company's 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.
