Yahoo Finance Jewett-Cameron Trading Co Stock Is Estimated To Be Fairly Valued
- By GF Value
The stock of Jewett-Cameron Trading Co (NAS:JCTCF, 30-year Financials) is estimated to be fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $9.9999 per share and the market cap of $34.9 million, Jewett-Cameron Trading Co stock is estimated to be fairly valued. GF Value for Jewett-Cameron Trading Co is shown in the chart below.
Because Jewett-Cameron Trading Co is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 5.7% over the past five years.
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Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Thus, it is important to carefully review the financial strength of a company before deciding whether to buy its stock. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a company. Jewett-Cameron Trading Co has a cash-to-debt ratio of 4.25, which is better than 86% of the companies in Forest Products industry. GuruFocus ranks the overall financial strength of Jewett-Cameron Trading Co at 7 out of 10, which indicates that the financial strength of Jewett-Cameron Trading Co is fair. This is the debt and cash of Jewett-Cameron Trading Co over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Jewett-Cameron Trading Co has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $51 million and earnings of $0.96 a share. Its operating margin is 9.00%, which ranks better than 70% of the companies in Forest Products industry. Overall, the profitability of Jewett-Cameron Trading Co is ranked 8 out of 10, which indicates strong profitability. This is the revenue and net income of Jewett-Cameron Trading Co over the past years:
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term stock performance of a company. A faster growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Jewett-Cameron Trading Co is 5.7%, which ranks better than 76% of the companies in Forest Products industry. The 3-year average EBITDA growth rate is 2.8%, which ranks in the middle range of the companies in Forest Products industry.
Another way to look at the profitability of a company is to compare its return on invested capital and the weighted cost of capital. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want to have the return on invested capital higher than the weighted cost of capital. For the past 12 months, Jewett-Cameron Trading Co's return on invested capital is 22.11, and its cost of capital is 4.23. The historical ROIC vs WACC comparison of Jewett-Cameron Trading Co is shown below:
In closing, the stock of Jewett-Cameron Trading Co (NAS:JCTCF, 30-year Financials) shows every sign of being fairly valued. The company's financial condition is fair and its profitability is strong. Its growth ranks in the middle range of the companies in Forest Products industry. To learn more about Jewett-Cameron Trading Co stock, you can check out its 30-year Financials here.
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This article first appeared on GuruFocus.
