Liberty Global PLC (LTS: 0XHR, 30 Years Financials) stock appears to be slightly undervalued, according to GuruFocus Value’s 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 $ 26.97 per share and market cap of $ 15.2 billion, Liberty Global PLC stock is estimated to be slightly undervalued. The GF value for Liberty Global PLC is shown in the table below.

Given that Liberty Global PLC is relatively undervalued, its long-term stock return is likely to outweigh its business growth, which has averaged 14.4% over the past five years.

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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. Looking at the cash-to-debt ratio and interest coverage is a great starting point for understanding the financial strength of a business. Liberty Global PLC has a cash to debt ratio of 0.18 which is worse than 80% of companies in the media industry – diversified. GuruFocus ranks Liberty Global PLC’s overall financial strength as 3 out of 10, which indicates that Liberty Global PLC’s financial strength is low. Here is Liberty Global PLC’s debt and cash flow over the past several years:

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It is less risky to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A business with high profit margins is also generally a safer investment than a business with low profit margins. Liberty Global PLC has been profitable 4 in the past 10 years. In the past twelve months, the company posted sales of $ 12.7 billion and a loss of $ 1.94 per share. His the operating margin is 20.24%, which ranks better than 87% of companies in the Media industry – Diversified. Overall, GuruFocus ranks Liberty Global PLC’s profitability as 5 out of 10, which indicates fair profitability. Here is Liberty Global PLC’s sales and net income for the past few years:

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One of the most important factors in the valuation of a business is growth. Long-term stock performance is closely linked to growth, according to GuruFocus research. Firms that grow faster create more shareholder value, especially if that growth is profitable. Liberty Global PLC’s average annual revenue growth is 14.4%, which ranks better than 84% of companies in the media industry – diversified. The 3-year average EBITDA growth is -6.5%, which is within the average for companies in the Media – Diversified industry.

Another way to determine the profitability of a business is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) 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. When the ROIC is higher than the WACC, it implies that the company creates value for the shareholders. Liberty Global PLC’s return on invested capital in the past 12 months is 4.63 and its cost of capital is 6.99. Liberty Global PLC’s historical ROIC vs WACC comparison is shown below:

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In conclusion, the stock of Liberty Global PLC (LTS: 0XHR, 30 years Financials) seems to be slightly undervalued. The company’s financial situation is bad and its profitability is fair. Its growth is in the mid-range of companies in the Media – Diversified industry. To learn more about Liberty Global PLC stock, you can view its 30-year financial data here.

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