Hyundai Motor Co Stock Shows Every Sign Of Being Significantly Overvalued (2024)
GuruFocus.com
·4 min read
- By GF Value
The stock of Hyundai Motor Co (OTCPK:HYMTF, 30-year Financials) gives every indication of being significantly overvalued, 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 $47.29 per share and the market cap of $30 billion, Hyundai Motor Co stock is believed to be significantly overvalued. GF Value for Hyundai Motor Co is shown in the chart below.
Because Hyundai Motor Co is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which is estimated to grow 6.49% 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. Hyundai Motor Co has a cash-to-debt ratio of 0.32, which is worse than 67% of the companies in Vehicles & Parts industry. GuruFocus ranks the overall financial strength of Hyundai Motor Co at 4 out of 10, which indicates that the financial strength of Hyundai Motor Co is poor. This is the debt and cash of Hyundai Motor Co over the past years:
It poses less risk to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Hyundai Motor Co has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $50.2 billion and earnings of $2.416 a share. Its operating margin is 1.66%, which ranks in the middle range of the companies in Vehicles & Parts industry. Overall, GuruFocus ranks the profitability of Hyundai Motor Co at 5 out of 10, which indicates fair profitability. This is the revenue and net income of Hyundai Motor 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 performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Hyundai Motor Co is -11.1%, which ranks worse than 87% of the companies in Vehicles & Parts industry. The 3-year average EBITDA growth rate is -19.5%, which ranks worse than 84% of the companies in Vehicles & Parts 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, Hyundai Motor Co's return on invested capital is 0.69, and its cost of capital is 4.00. The historical ROIC vs WACC comparison of Hyundai Motor Co is shown below:
In closing, Hyundai Motor Co (OTCPK:HYMTF, 30-year Financials) stock is believed to be significantly overvalued. The company's financial condition is poor and its profitability is fair. Its growth ranks worse than 84% of the companies in Vehicles & Parts industry. To learn more about Hyundai Motor Co stock, you can check out its 30-year Financials here.
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In closing, Hyundai Motor Co (OTCPK:HYMTF, 30-year Financials) stock is believed to be significantly overvalued. The company's financial condition is poor and its profitability is fair. Its growth ranks worse than 84% of the companies in Vehicles & Parts industry.
Profit multiples such as P/E, EBITDA, EBIT and similar metrics to revenue and market cap show us that Hyundai, following a price decline of 13% in a 1-year period, trades at an undervaluation - but that it is starting to recover.
There are mixed signals in the stock today. The Hyundai Motor Company stock holds a buy signal from the short-term Moving Average; at the same time, however, the long-term average holds a general sell signal.
Hyundai Sonata: The resale value percentage of the Hyundai Sonata after five years is 55.3%, according to iSeeCars. This lower resale value is likely due to market competition with other midsize sedans and rapid advancements in newer models.
NEW YORK — When Hyundai Motor launched its Genesis luxury brand domestically in 2016, many were skeptical the South Korean automaker — recognized mainly for budget vehicles at the time — knew what it was doing.
How long do Hyundai cars last? Hyundais last, on average, about 200,000 miles, comparable to most life spans for mainstream automotive manufacturers. While no records have been broken for miles driven or years owned with a Hyundai, that's not to say none are in progress.
Hyundai Motor Company has achieved this level of notoriety by building safe cars that drivers can count on mile after mile, and Hyundai continues to improve the dependability of its vehicles with each newly released model year to a point where Hyundai is now exceeding Toyota, Honda, and other brands known for their ...
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In general, higher EPS is better but one has to consider the number of shares outstanding, the potential for share dilution, and earnings trends over time. If a company misses or beats analysts' consensus expectations for EPS, its shares can either crash or rally, respectively.
As a general rule, the higher a company's EPS, the more profitable it's likely to be, though a higher EPS isn't a guarantee of future performance. It's important to remember that the quality and reliability of a company's EPS ratio can be influenced by how the company reports earnings and expenses.
There is no hard and fast number to define a good EPS across companies. Since so many factors go into a company's net income and stock price, variables always exist from one company to the next. To determine whether a company's EPS is "good," it's essential to consider the company's earnings per share in context.
As of April 2024 Hyundai has a market cap of $41.24 Billion. This makes Hyundai the world's 465th most valuable company by market cap according to our data.
According to a 2022 J.D. Power U.S. Vehicle Dependability Study, Hyundai is one of the most dependable brands, ranking higher than brands such as Toyota, Lexus, Honda, Mazda, and BMW. Additionally, Repair Pal has ranked Hyundai 4th in reliability out of 32 car brands.
Hyundai continues its efforts to recuperate from its previous branding as an unreliable automotive manufacturer. A class-leading 10-year, 100,000-mile warranty draws many customers, in addition to a range of affordable models, including the sub-$20,000 Hyundai Venue.
Introduction: My name is Greg O'Connell, I am a delightful, colorful, talented, kind, lively, modern, tender person who loves writing and wants to share my knowledge and understanding with you.
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