Freedom Holding Corp (FRHC, Financial) experienced a daily loss of 4.83% and a 3-month gain of 4.52%. The company's Earnings Per Share (EPS) stands at 3.47. With these figures in mind, is the stock modestly undervalued? This article will delve into the valuation analysis of Freedom Holding, providing essential insights for potential investors.
Company Introduction
Freedom Holding Corp is a major player in the securities industry, offering a range of services including retail securities brokerage, research, investment counseling, securities trading, market making, corporate investment banking, and underwriting services in Eurasia. The company operates through its subsidiaries on several exchanges, including the Kazakhstan Stock Exchange (KASE), Moscow Exchange (MOEX), Saint-Petersburg Exchange (SPB), the Ukrainian Exchange, the Uzbek Republican Currency Exchange (UZCE), and the Republican Stock Exchange of Tashkent (UZSE). The majority of its revenue comes from Europe.
Summarizing GF Value
The GF Value is a unique measure that estimates the intrinsic value of a stock. It's calculated based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
Freedom Holding (FRHC, Financial)'s stock appears to be modestly undervalued according to the GF Value. With a current price of $81 per share, and a market cap of $4.80 billion, the long-term return of Freedom Holding's stock is likely to be higher than its business growth due to its relative undervaluation.
Financial Strength
Before investing in a company, it's crucial to assess its financial strength. Companies with poor financial strength pose a higher risk of permanent loss. Freedom Holding has a cash-to-debt ratio of 2.01, which is lower than 50.07% of 749 companies in the Capital Markets industry. The overall financial strength of Freedom Holding is 5 out of 10, indicating fair financial health.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. Freedom Holding has been profitable 7 out of the past 10 years. The company's operating margin is 58.84%, ranking better than 88.14% of 641 companies in the Capital Markets industry. This indicates strong profitability.
Growth is a significant factor in the valuation of a company. Freedom Holding's 3-year average revenue growth rate is better than 94.37% of 675 companies in the Capital Markets industry. Its 3-year average EBITDA growth rate is 121.2%, ranking better than 94.41% of 465 companies in the same industry. This indicates strong growth.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another way to assess its profitability. Over the past 12 months, Freedom Holding's ROIC was 11.38, while its WACC came in at 12.84. This suggests that the company is creating value for shareholders.
Conclusion
In summary, the stock of Freedom Holding (FRHC, Financial) appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 94.41% of 465 companies in the Capital Markets industry. To learn more about Freedom Holding stock, you can check out its 30-Year Financials here.
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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.
