Stock Analysis: Affordable Growth

Fundamental Rating

GCT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 14 industry peers in the Distributors industry. While GCT belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. GCT is growing strongly while it also seems undervalued. This is an interesting combination With these ratings, GCT could be worth investigating further for value and growth investing!.

1. Profitability

1.1 Basic Checks

GCT had positive earnings in the past year.

GCT had a positive operating cash flow in the past year.

Each year in the past 5 years GCT has been profitable.

GCT had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

The Return On Assets of GCT (10.80%) is better than 84.62% of its industry peers.

With an excellent Return On Equity value of 31.79%, GCT belongs to the best of the industry, outperforming 84.62% of the companies in the same industry.

Looking at the Return On Invested Capital, with a value of 13.25%, GCT belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.

The Average Return On Invested Capital over the past 3 years for GCT is in line with the industry average of 13.85%.

		Industry Rank	Sector Rank
ROA	10.8%
ROE	31.79%
ROIC	13.25%

ROA(3y)6.48%

ROA(5y)6.94%

ROE(3y)15.7%

ROE(5y)14.55%

ROIC(3y)15.64%

ROIC(5y)20.04%

1.3 Margins

Looking at the Profit Margin, with a value of 11.57%, GCT belongs to the top of the industry, outperforming 92.31% of the companies in the same industry.

In the last couple of years the Profit Margin of GCT has grown nicely.

GCT's Operating Margin of 13.66% is amongst the best of the industry. GCT outperforms 92.31% of its industry peers.

In the last couple of years the Operating Margin of GCT has remained more or less at the same level.

GCT's Gross Margin of 26.57% is in line compared to the rest of the industry. GCT outperforms 46.15% of its industry peers.

GCT's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	13.66%
PM (TTM)	11.57%
GM	26.57%

OM growth 3Y0.12%

OM growth 5YN/A

PM growth 3Y41.51%

PM growth 5YN/A

GM growth 3Y-0.56%

GM growth 5YN/A

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so GCT is still creating some value.

The number of shares outstanding for GCT has been increased compared to 1 year ago.

Compared to 1 year ago, GCT has an improved debt to assets ratio.

2.2 Solvency

An Altman-Z score of 2.82 indicates that GCT is not a great score, but indicates only limited risk for bankruptcy at the moment.

Looking at the Altman-Z score, with a value of 2.82, GCT is doing worse than 61.54% of the companies in the same industry.

GCT has a debt to FCF ratio of 0.00. This is a very positive value and a sign of high solvency as it would only need 0.00 years to pay back of all of its debts.

Looking at the Debt to FCF ratio, with a value of 0.00, GCT belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.

A Debt/Equity ratio of 0.00 indicates that GCT is not too dependend on debt financing.

GCT has a better Debt to Equity ratio (0.00) than 76.92% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0
Altman-Z	2.82

ROIC/WACC1.1

WACC12.04%

2.3 Liquidity

A Current Ratio of 1.98 indicates that GCT should not have too much problems paying its short term obligations.

GCT has a Current ratio of 1.98. This is in the better half of the industry: GCT outperforms 61.54% of its industry peers.

A Quick Ratio of 1.19 indicates that GCT should not have too much problems paying its short term obligations.

The Quick ratio of GCT (1.19) is better than 61.54% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.98
Quick Ratio	1.19

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 192.01% over the past year.

The Earnings Per Share has been growing by 92.98% on average over the past years. This is a very strong growth

GCT shows a strong growth in Revenue. In the last year, the Revenue has grown by 84.26%.

GCT shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 36.70% yearly.

EPS 1Y (TTM)192.01%

EPS 3Y92.98%

EPS 5YN/A

EPS Q2Q%128.89%

Revenue 1Y (TTM)84.26%

Revenue growth 3Y36.7%

Revenue growth 5YN/A

Sales Q2Q%103.01%

3.2 Future

GCT is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 29.77% yearly.

Based on estimates for the next years, GCT will show a very strong growth in Revenue. The Revenue will grow by 34.34% on average per year.

EPS Next Y41.46%

EPS Next 2Y33.02%

EPS Next 3Y29.77%

EPS Next 5YN/A

Revenue Next Year63.18%

Revenue Next 2Y40.54%

Revenue Next 3Y34.34%

Revenue Next 5YN/A

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 7.19 indicates a rather cheap valuation of GCT.

100.00% of the companies in the same industry are more expensive than GCT, based on the Price/Earnings ratio.

GCT's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 31.77.

With a Price/Forward Earnings ratio of 6.67, the valuation of GCT can be described as very cheap.

Based on the Price/Forward Earnings ratio, GCT is valued cheaper than 100.00% of the companies in the same industry.

GCT is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.70, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	7.19
Fwd PE	6.67

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, GCT is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.

Compared to the rest of the industry, the Price/Free Cash Flow ratio of GCT indicates a somewhat cheap valuation: GCT is cheaper than 61.54% of the companies listed in the same industry.