The stock of Curaleaf Holdings (OTCPK:CURLF, 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 $15.07 per share and the market cap of $10.2 billion, Curaleaf Holdings stock is believed to be fairly valued. GF Value for Curaleaf Holdings is shown in the chart below.
Because Curaleaf Holdings is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 166.7% over the past three years and is estimated to grow 112.88% annually over the next three to five years.
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. Curaleaf Holdings has a cash-to-debt ratio of 0.13, which is worse than 83% of the companies in Drug Manufacturers industry. GuruFocus ranks the overall financial strength of Curaleaf Holdings at 5 out of 10, which indicates that the financial strength of Curaleaf Holdings is fair. This is the debt and cash of Curaleaf Holdings over the past years:
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Curaleaf Holdings has been profitable 0 years over the past 10 years. During the past 12 months, the company had revenues of $626.6 million and loss of $0.094 a share. Its operating margin of 10.17% in the middle range of the companies in Drug Manufacturers industry. Overall, GuruFocus ranks Curaleaf Holdings's profitability as poor. This is the revenue and net income of Curaleaf Holdings over the past years:
One of the most important factors in the valuation of a company is growth. Long-term stock performance is closely correlated with growth according to GuruFocus research. Companies that grow faster create more value for shareholders, especially if that growth is profitable. The average annual revenue growth of Curaleaf Holdings is 166.7%, which ranks better than 98% of the companies in Drug Manufacturers industry. The 3-year average EBITDA growth is 335.5%, which ranks better than 100% of the companies in Drug Manufacturers industry.
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). 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. If the return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Curaleaf Holdings's ROIC is -12.41 while its WACC came in at -165.88. The historical ROIC vs WACC comparison of Curaleaf Holdings is shown below:
In closing, Curaleaf Holdings (OTCPK:CURLF, 30-year Financials) stock is estimated to be fairly valued. The company's financial condition is fair and its profitability is poor. Its growth ranks better than 100% of the companies in Drug Manufacturers industry. To learn more about Curaleaf Holdings stock, you can check out its 30-year Financials here.
