[at&t protech number]Alpha Pro Tech Stock Shows Every Sign Of Being Modestly Overvalued
2021-08-06 17:06:27

  - By GF Value

  The stock of Alpha Pro Tech (AMEX:APT, 30-year Financials) is estimated to be modestly 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 $10.08 per share and the market cap of $137.1 million, Alpha Pro Tech stock is believed to be modestly overvalued. GF Value for Alpha Pro Tech is shown in the chart below.

  Warning! GuruFocus has detected 3 Warning Sign with APT. Click here to check it out.

  APT 15-Year Financial Data

  The intrinsic value of APT

  Peter Lynch Chart of APT

  Alpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly Overvalued

  Because Alpha Pro Tech is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 35.8% over the past three years and is estimated to grow 20.80% annually over the next three to five years.

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  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. Alpha Pro Tech has a cash-to-debt ratio of 6.50, which is better than 82% of the companies in Construction industry. GuruFocus ranks the overall financial strength of Alpha Pro Tech at 7 out of 10, which indicates that the financial strength of Alpha Pro Tech is fair. This is the debt and cash of Alpha Pro Tech over the past years:

  Alpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly Overvalued

  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. Alpha Pro Tech has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $102.7 million and earnings of $1.96 a share. Its operating margin of 30.75% better than 97% of the companies in Construction industry. Overall, GuruFocus ranks Alpha Pro Tech’s profitability as strong. This is the revenue and net income of Alpha Pro Tech over the past years:

  Alpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly Overvalued

  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 Alpha Pro Tech is 35.8%, which ranks better than 95% of the companies in Construction industry. The 3-year average EBITDA growth is 114.9%, which ranks better than 99% of the companies in Construction industry.

  Another way to evaluate a company’s profitability is to compare its return on invested capital (ROIC) to its weighted 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 ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Alpha Pro Tech’s ROIC was 77.60, while its WACC came in at -8.76. The historical ROIC vs WACC comparison of Alpha Pro Tech is shown below:

  Alpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly OvervaluedAlpha Pro Tech Stock Shows Every Sign Of Being Modestly Overvalued

  In summary, the stock of Alpha Pro Tech (AMEX:APT, 30-year Financials)shows every sign of being modestly overvalued. The company’s financial condition is fair and its profitability is strong. Its growth ranks better than 99% of the companies in Construction industry. To learn more about Alpha Pro Tech stock, you can check out its 30-year Financials here. To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener. This article first appeared on GuruFocus.