AtriCure Inc (ATRC, Financial) has recently experienced a notable daily gain of 5.19%, yet its 3-month performance reflects a loss of 28.67%. With a Loss Per Share of $0.54, investors are left questioning whether the stock is significantly undervalued. This article aims to explore AtriCure's valuation, providing an in-depth analysis to determine if the current market price truly reflects its intrinsic value.
Company Introduction
AtriCure Inc is at the forefront of surgical treatments for atrial fibrillation (Afib), left atrial appendage (LAA) management, and post-operative pain management. With a direct sales force and distributors, AtriCure markets its innovative products, including Cryo, Soft Tissue Dissection, and RF Ablation Pacing and Sensing, mainly in the United States. Comparing the current stock price of $36.89 to the GF Value of $65.31, we embark on a journey to uncover the true worth of AtriCure and whether it presents an opportunity for value investors.
Summarize GF Value
The GF Value is a proprietary measure of AtriCure's intrinsic value, factoring in historical trading multiples, a GuruFocus adjustment for past performance and growth, and future business projections. The GF Value Line suggests the fair trading value of AtriCure's stock. If the stock price is significantly below this line, as is the case with AtriCure's current price of $36.89 and a market cap of $1.70 billion, the stock is likely undervalued, implying a potentially higher future return than its business growth alone would suggest.
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Financial Strength
Assessing the financial strength of AtriCure is crucial. The company's cash-to-debt ratio stands at 1.79, placing it in a weaker position than 54.53% of its industry peers. Despite this, AtriCure's overall financial strength is rated as fair, with a score of 7 out of 10. This assessment is vital for investors looking to mitigate the risk of permanent loss.
Profitability and Growth
AtriCure's profitability is a mixed bag; while the company has been profitable in the past, its operating margin of -5.82% is less impressive, ranking lower than more than half of its competitors. With a 3-year average annual revenue growth rate of 5.6%, AtriCure's growth is also not particularly remarkable, sitting below the median for its industry. These factors contribute to a profitability rank of 3 out of 10, indicating room for improvement.
ROIC vs. WACC
Comparing AtriCure's Return on Invested Capital (ROIC) of -5.2 to its Weighted Average Cost of Capital (WACC) of 14.2 reveals that the company is not currently creating value for its shareholders. This is a red flag for investors, as it suggests that AtriCure's investments are not yielding returns that exceed its capital costs.
Conclusion
In conclusion, AtriCure (ATRC, Financial) appears to be significantly undervalued according to GuruFocus' metrics. The company's financial condition is fair, but its profitability is poor, and its growth is not particularly strong compared to industry standards. For investors considering AtriCure stock, a deeper dive into the company's 30-Year Financials is recommended.
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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.
