World Fuel Services Stock Show

The stock of World Fuel Services (NYSE:INT, 30-year Financials) is believed to be 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 $30.37 per share and the market cap of $1.9 billion, World Fuel Services stock is believed to be significantly overvalued. GF Value for World Fuel Services is shown in the chart below.

Because World Fuel Services is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.

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Since investing in companies with low financial strength could result in permanent capital loss, investors must carefully review a company’s financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company’s financial strength. World Fuel Services has a cash-to-debt ratio of 1.41, which ranks better than 66{9141277137bc5453450963fdb680487676d6442ace802d3de9e3808585508df8} of the companies in Oil & Gas industry. Based on this, GuruFocus ranks World Fuel Services’s financial strength as 6 out of 10, suggesting fair balance sheet. This is the debt and cash of World Fuel Services over the past years:

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Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. World Fuel Services has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $18.3 billion and earnings of $1.37 a share. Its operating margin is 0.77{9141277137bc5453450963fdb680487676d6442ace802d3de9e3808585508df8}, which ranks in the middle range of the companies in Oil & Gas industry. Overall, the profitability of World Fuel Services is ranked 6 out of 10, which indicates fair profitability. This is the revenue and net income of World Fuel Services over the past years:

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Growth is probably one of the most important factors 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. If a company’s business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Likewise, if a company’s revenue and earnings are declining, the value of the company will decrease. World Fuel Services’s 3-year average revenue growth rate is worse than 69{9141277137bc5453450963fdb680487676d6442ace802d3de9e3808585508df8} of the companies in Oil & Gas industry. World Fuel Services’s 3-year average EBITDA growth rate is 33.9{9141277137bc5453450963fdb680487676d6442ace802d3de9e3808585508df8}, which ranks better than 83{9141277137bc5453450963fdb680487676d6442ace802d3de9e3808585508df8} of the companies in Oil & Gas 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, World Fuel Services’s return on invested capital is 3.62, and its cost of capital is 8.82. The historical ROIC vs WACC comparison of World Fuel Services is shown below:

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In short, the stock of World Fuel Services (NYSE:INT, 30-year Financials) shows every sign of being significantly overvalued. The company’s financial condition is fair and its profitability is fair. Its growth ranks better than 83{9141277137bc5453450963fdb680487676d6442ace802d3de9e3808585508df8} of the companies in Oil & Gas industry. To learn more about World Fuel Services stock, you can check out its 30-year Financials here.

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