On September 15, 2023, Upbound Group Inc (UPBD, Financial) experienced a daily loss of 5.45%, contributing to a three-month loss of -11.91%. The company's per-share loss stands at 0.04. These figures naturally lead to the question: Is the stock significantly undervalued? This article aims to provide a detailed valuation analysis of Upbound Group Inc (UPBD). We invite readers to delve into our comprehensive exploration of the company's value.
Introducing Upbound Group Inc (UPBD, Financial)
Upbound Group Inc is an omnichannel platform company committed to elevating financial opportunity for all through inclusive, and technology-driven financial solutions. Its operating segments include the Rent-A-Center Business, Acima, Mexico, and franchising. The company derives a majority of its revenue from the Acima segment. The current stock price stands at $29.17, while our GF Value estimates the fair value at $41.57, suggesting that the stock may be significantly undervalued.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line represents the fair trading value of the stock. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Upbound Group (UPBD, Financial) appears to be significantly undervalued based on our GF Value. The stock's current price of $29.17 per share and a market cap of $1.60 billion suggest that the stock may offer high future returns. As a significantly undervalued stock, the long-term return of Upbound Group is likely to be much higher than its business growth.
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Financial Strength of Upbound Group
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid this, investors must review a company's financial strength before deciding to purchase shares. Upbound Group has a cash-to-debt ratio of 0.06, which ranks worse than 94.22% of 2752 companies in the Software industry. The overall financial strength of Upbound Group is 5 out of 10, indicating fair financial strength.
Profitability and Growth of Upbound Group
Consistently profitable companies offer less risk for investors. Upbound Group has been profitable 8 over the past 10 years. Over the past twelve months, the company had a revenue of $4 billion and a Loss Per Share of $0.04. Its operating margin is 3.2%, ranking better than 51.56% of 2731 companies in the Software industry. Overall, the profitability of Upbound Group is ranked 7 out of 10, indicating fair profitability.
Growth is a critical factor in the valuation of a company. The 3-year average annual revenue growth of Upbound Group is 14.7%, ranking better than 64.94% of 2413 companies in the Software industry. The 3-year average EBITDA growth rate is 15.3%, ranking better than 60.88% of 2009 companies in the Software industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can 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 exceeds the WACC, the company is likely creating value for its shareholders. In the past 12 months, Upbound Group's ROIC was -0.31 while its WACC came in at 8.36.
Conclusion
In summary, Upbound Group (UPBD, Financial) appears to be significantly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 60.88% of 2009 companies in the Software industry. To learn more about Upbound Group stock, you can check out its 30-Year Financials here.
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