Aptiv PLC (APTV, Financial) experienced a daily loss of -4.34%, with a 3-month gain of 4.68%. The Earnings Per Share (EPS) (EPS) stands at 3.29. Is this stock modestly undervalued? This article aims to provide a comprehensive valuation analysis of Aptiv PLC (APTV). Let's delve into the details.
Company Overview
Aptiv PLC is a leading supplier of vehicle electrical systems, including wiring assemblies, harnesses, connectors, electrical centers, and hybrid electrical systems. The firm's advanced safety and user experience segment provides body controls, infotainment and connectivity systems, active safety electronics, and advanced driver-assist technologies. Its largest customers are General Motors and Stellantis, both contributing roughly 9% of 2022 revenue, followed by Ford and Volkswagen, both at 8%. North America and Europe represented approximately 37% and 31% of total 2022 revenue, respectively.
The company's current stock price is $98.7, with a market capitalization of $27.90 billion. The GF Value, a proprietary estimate of fair value, stands at $135.28, indicating that the stock is modestly undervalued.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. 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.
Based on the GF Value, Aptiv PLC (APTV, Financial) appears to be modestly undervalued. Given this undervaluation, the long-term return of its stock is likely to be higher than its business growth.
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Financial Strength
It's crucial to assess the financial strength of a company before investing. Companies with weak financial strength pose a higher risk of permanent loss. Aptiv PLC's cash-to-debt ratio is 0.19, which is worse than 75.64% of companies in the Vehicles & Parts industry. The overall financial strength of Aptiv PLC is 6 out of 10, indicating fair financial health.
Profitability and Growth
Companies that have consistently been profitable over the long term offer less risk to investors. Aptiv PLC has been profitable 10 over the past 10 years. The company's profitability is ranked 8 out of 10, indicating strong profitability.
Growth is a critical factor in a company's valuation. Aptiv PLC's growth ranks worse than 66.98% of companies in the Vehicles & Parts industry, with a 3-year average revenue growth rate worse than 52.53% of industry peers and a 3-year average EBITDA growth rate of -2.3%.
ROIC Vs. WACC
Comparing a company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) is another way to assess 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. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Aptiv PLC's ROIC is 11, and its WACC is 11.35.
Conclusion
In conclusion, the stock of Aptiv PLC (APTV, Financial) appears to be modestly undervalued. The company's financial condition is fair, its profitability is strong, but its growth ranks worse than 66.98% of companies in the Vehicles & Parts industry. To learn more about Aptiv PLC stock, you can check out its 30-Year Financials here.
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