We assign a fundamental rating of 5 out of 10 to IAA. IAA was compared to 80 industry peers in the Commercial Services & Supplies industry. While IAA has a great profitability rating, there are some minor concerns on its financial health. IAA is not valued too expensively and it also shows a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

IAA had positive earnings in the past year.
In the past year IAA had a positive cash flow from operations.

1.2 Ratios

IAA has a better Return On Assets (8.69%) than 85.00% of its industry peers.
IAA has a Return On Equity of 51.54%. This is amongst the best in the industry. IAA outperforms 98.75% of its industry peers.
The Return On Invested Capital of IAA (10.86%) is better than 83.75% of its industry peers.
The Average Return On Invested Capital over the past 3 years for IAA is significantly above the industry average of 10.57%.
The 3 year average ROIC (20.07%) for IAA is well above the current ROIC(10.86%). The reason for the recent decline needs to be investigated.

		Industry Rank	Sector Rank
ROA	8.69%
ROE	51.54%
ROIC	10.86%

ROA(3y)N/A

ROA(5y)N/A

ROE(3y)N/A

ROE(5y)N/A

ROIC(3y)20.07%

ROIC(5y)N/A

1.3 Margins

IAA's Profit Margin of 13.93% is amongst the best of the industry. IAA outperforms 93.75% of its industry peers.
In the last couple of years the Profit Margin of IAA has remained more or less at the same level.
Looking at the Operating Margin, with a value of 19.87%, IAA belongs to the top of the industry, outperforming 96.25% of the companies in the same industry.
IAA's Operating Margin has been stable in the last couple of years.
The Gross Margin of IAA (35.00%) is better than 67.50% of its industry peers.
In the last couple of years the Gross Margin of IAA has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	19.87%
PM (TTM)	13.93%
GM	35%

OM growth 3Y-3.51%

OM growth 5Y0.63%

PM growth 3Y1.19%

PM growth 5Y1.03%

GM growth 3Y-2.86%

GM growth 5Y-0.66%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), IAA is creating value.
IAA has less shares outstanding than it did 1 year ago.
IAA has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.57 indicates that IAA is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of IAA (2.57) is better than 67.50% of its industry peers.
The Debt to FCF ratio of IAA is 5.62, which is a neutral value as it means it would take IAA, 5.62 years of fcf income to pay off all of its debts.
IAA has a Debt to FCF ratio of 5.62. This is in the better half of the industry: IAA outperforms 80.00% of its industry peers.
A Debt/Equity ratio of 1.95 is on the high side and indicates that IAA has dependencies on debt financing.
IAA has a Debt to Equity ratio of 1.95. This is amonst the worse of the industry: IAA underperforms 83.75% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	1.95
Debt/FCF	5.62
Altman-Z	2.57

ROIC/WACC1.31

WACC8.31%

2.3 Liquidity

A Current Ratio of 1.75 indicates that IAA should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.75, IAA is in the better half of the industry, outperforming 65.00% of the companies in the same industry.
IAA has a Quick Ratio of 1.64. This is a normal value and indicates that IAA is financially healthy and should not expect problems in meeting its short term obligations.
IAA has a Quick ratio of 1.64. This is in the better half of the industry: IAA outperforms 73.75% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.75
Quick Ratio	1.64

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

IAA shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.50%.
The Earnings Per Share has been growing by 12.69% on average over the past years. This is quite good.
The Revenue has grown by 14.23% in the past year. This is quite good.
The Revenue has been growing by 11.48% on average over the past years. This is quite good.

EPS 1Y (TTM)-2.5%

EPS 3Y14.83%

EPS 5Y12.69%

EPS Q2Q%0%

Revenue 1Y (TTM)14.23%

Revenue growth 3Y13.47%

Revenue growth 5Y11.48%

Sales Q2Q%-4.49%

3.2 Future

Based on estimates for the next years, IAA will show a decrease in Earnings Per Share. The EPS will decrease by -1.56% on average per year.
Based on estimates for the next years, IAA will show a small growth in Revenue. The Revenue will grow by 4.47% on average per year.

EPS Next Y0.35%

EPS Next 2Y1.07%

EPS Next 3Y-1.56%

EPS Next 5YN/A

Revenue Next Year1.27%

Revenue Next 2Y2.88%

Revenue Next 3Y4.47%

Revenue Next 5YN/A

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 17.05 indicates a rather expensive valuation of IAA.
Compared to the rest of the industry, the Price/Earnings ratio of IAA indicates a somewhat cheap valuation: IAA is cheaper than 71.25% of the companies listed in the same industry.
IAA's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.30.
The Price/Forward Earnings ratio is 16.99, which indicates a correct valuation of IAA.
Compared to the rest of the industry, the Price/Forward Earnings ratio of IAA indicates a somewhat cheap valuation: IAA is cheaper than 68.75% of the companies listed in the same industry.
IAA's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	17.05
Fwd PE	16.99

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of IAA is on the same level as its industry peers.
Based on the Price/Free Cash Flow ratio, IAA is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	24.16
EV/EBITDA	12.04

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates IAA does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of IAA may justify a higher PE ratio.