Calyxt’s stock (NAS: CLXT, 30-year Financials) gives all indications of being a possible value trap, according to the GuruFocus value calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a stock’s price is significantly above the GF value line, it is overvalued and its future performance is likely to be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 4.42 per share and market cap of $ 164.4 million, Calyxt stock is seen as a possible value trap. The GF value for Calyxt is shown in the table below.
The reason we think Calyxt stock could be a value trap is that its Piotroski F-score is only 2, out of a total of 9. Such a Piotroski F-score indicates that the company is deteriorating. in several aspects in the areas of profitability, financing and efficiency. In this case, investors should look beyond the low valuation of the company and make sure that it does not present any long-term risk. To learn more about how the Piotroski F-score measures a company’s business trend, please click here. Additionally, Calyxt has an Altman Z-score of -2.70, which indicates that the company’s financial position is in the troubled zone and involves a higher risk of bankruptcy. An Altman Z score above 2.99 would be preferable, indicating sound financial conditions. To learn more about how the Z-score measures a company’s financial risk, please click here.
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Investing in companies with low financial strength presents a higher risk of permanent loss of capital. Thus, it is important to carefully consider the financial strength of a company before deciding whether or not to buy its shares. Examining the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a business. Calyxt has a cash-to-debt ratio of 0.99, which is in line with the average for companies in the consumer packaged goods industry. GuruFocus ranks Calyxt’s overall financial strength as 3 out of 10, indicating that Calyxt’s financial strength is poor. Here is Calyxt’s debt and cash flow over the past few years:
It is less risky to invest in profitable companies, especially those whose profitability is constant over the long term. A business with high profit margins is generally a safer investment than one with low profit margins. Calyxt has been profitable 0 in the past 10 years. In the past twelve months, the company achieved sales of $ 25.9 million and a loss of $ 1.26 per share. Its operating margin is -162.98%, which ranks it in the bottom 10% of companies in the consumer packaged goods industry. Overall, Calyxt’s profitability is ranked 2 out of 10, indicating low profitability. Here is Calyxt’s sales and net income over the past few years:
Growth is probably one of the most important factors in the valuation of a business. GuruFocus research has found that growth is closely tied to the long-term performance of a company’s stocks. If a company’s business is growing, the business typically creates value for its shareholders, especially if the growth is profitable. Likewise, if the income and profits of a business decrease, the value of the business will decrease. Calyxt’s 3-year average turnover growth rate is greater than 100% for companies in the consumer packaged goods sector. Calyxt’s 3-year average EBITDA growth rate is -4.1%, which is worse than 68% of companies in the consumer packaged goods sector.
Another way to assess 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 the extent to which a business 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 should pay, on average, to all of its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating shareholder value. Over the past 12 months, Calyxt’s ROIC was -145.33, while its WACC was 11.38. Calyxt’s historical ROIC vs WACC comparison is shown below:
In short, Calyxt stock (NAS: CLXT, 30-year Financials) is seen as a possible value trap. The company’s financial situation is bad and its profitability is bad. Its growth ranks worse than 68% of companies in the consumer packaged goods industry. To find out more about the Calyxt share, you can consult its financial data over 30 years here.
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