As of July 17, 2023, the stock price of Husqvarna AB (HUSQF, Financial) has seen a significant change of 18.67%, with a current price of $9.25. The company, with a market cap of $5.5 billion, has shown promising financial metrics and a GF Value of $11.36, indicating that it is modestly undervalued. The GF Value is a unique indicator of a stock's intrinsic worth, calculated based on historical trading multiples, an adjustment factor from GuruFocus, and estimates of future business performance.
Husqvarna AB is a leading manufacturer of outdoor power products for forest, park, and garden care. With three primary business segments: Husqvarna, Gardena, and Construction, the company offers a diverse range of products from chainsaws, trimmers, and mowers to professional equipment and diamond tools for cutting and drilling. It operates under various brands including Husqvarna, Gardena, and Diamant Boart, with its largest markets in North America and Europe.
Intrinsic Value Analysis
The GF Value of Husqvarna AB (HUSQF, Financial) suggests that the stock is modestly undervalued. The GF Value Line, which represents the fair value at which the stock should ideally be traded, is determined by historical trading multiples, an adjustment factor based on past performance and growth, and estimates of future business performance. As Husqvarna AB is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
Financial Strength and Profitability
Investing in companies with robust financial strength minimizes the risk of permanent capital loss. Husqvarna AB's cash-to-debt ratio of 0.14, which ranks worse than 88.74% of companies in the Industrial Products industry, suggests a fair balance sheet.
Profitable companies, especially those demonstrating consistent profitability over the long term, pose less risk. Husqvarna AB has been profitable 10 over the past 10 years, with a revenue of $5.3 billion and EPS of $0.33 in the past twelve months. Its operating margin is 5.49%, indicating strong profitability.
Growth Prospects
Company growth is a crucial factor in valuation. Husqvarna AB's 3-year average annual revenue growth rate is 8.5%, outperforming 57.6% of companies in the Industrial Products industry. However, its 3-year average EBITDA growth rate is 3.6%, which ranks worse than 61.25% of companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted cost of capital (WACC) provides another perspective on its profitability. Husqvarna AB's ROIC of 4.62 and WACC of 4.37 suggest a positive return relative to the cost of capital.
Conclusion
Overall, Husqvarna AB (HUSQF, Financial) stock appears to be modestly undervalued. The company exhibits fair financial condition and strong profitability, despite growth that lags behind 61.25% of companies in the Industrial Products industry. To learn more about Husqvarna AB stock, check out its 30-Year Financials here.
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