Nova Measuring Instruments Ltd. Stock Price and Value Analysis
Should you buy Nova Measuring Instruments Ltd. stock? (NasdaqGS:NVMI). Let's see how it does in our automated value investing analysis system.
NVMI Free Cash Flow Trend
Based on historical returns, we believe that Nova Measuring Instruments Ltd. can grow its free cash at a rate of about 4%. That's positive!
Inside the NVMI Numbers
(Nova Measuring Instruments Ltd. stock price per share)
Present Value/Intrinsic Valuation
The intrinsic value of a company is how much cash it can generate over its lifespan. If a business lasts for ten years and produces a million dollars of free cash profit every year, its intrinsic value is ten million dollars.
The present value of an investment is the price you must pay right now to earn that intrinsic value in however many years you want to wait. This of course depends on the rate of return you want for your investment.
You can't predict what a company will make in the future with perfect accuracy, but a company with a history of increasing its free cash flow every year is likely to do so over time. By projecting free cash flow into the future, you can calculate a fair price for the stock right now.
While most stocks are priced fairly, sometimes they go on sale. This calculation will help you decide that. You still have to figure out if it's a good investment, but bargains exist.
|NVMI Fair Price
(based on intrinsic value)
Safety Margin Price
The safety margin of a stock helps you avoid risk.
Why? Because the discounted free cash flow analysis relies on estimates, discounting the fair price by a further safety margin gives you some wiggle room to be wrong about those estimates. Established companies with stable free cash flow growth need a small safety margin. Smaller and newer and riskier companies need a larger safety margin. A company with a lot of debt needs a larger safety margin and a company with a lot of equity needs less.
By investing in multiple companies and keeping a sensible safety margin, you can be pleasantly surprised by great companies outperforming your expectations and minimize the possibility of stagnation (or even loss) by companies which underperform.
|NVMI Safety Price (based on a variable margin of safety)||$8.30|
PE Ratio Versus Sector
Comparing a stock's PE to the average PE of companies in its industry gives you a sense of market sentiment about the stock and how well it fares financially. It's not the only number, nor the most important, but comparing similar companies is valuable. A ratio far above or below that of its peers is significant.
Industries are more specific than sectors, so companies within most industries are more similar than are companies within an industry. Be aware that the size and customers of companies are important to their prospects.
|PE Ratio versus Sector||4% higher than other Technology stocks|
PE Ratio Versus Industry
Comparing a stock's PE to the average PE of companies in its sector gives you a sense of market sentiment about the stock and how well it fares financially. It's not the only number, nor the most important, but comparing similar companies is valuable. A ratio far above or below that of its peers is significant.
Be aware that sectors are very broad, with many types of companies in the same sector.
|PE Ratio versus Industry||47% higher than other Semiconductor Equipment & Materials stocks|
The cash yield of a stock is the ratio of free cash per share—real dollars available after bringing in revenue and paying bills—to the current price of the stock. It's similar to the PE ratio, but it's less prone to manipulation through accounting practices.
In general, the less you have to pay to make more money, the better.
Free Cash Flow Jitter
The free cash flow jitter of a stock measures how much the company's free cash flow varies from its historical trend, on average. While it's always nice to make more money than you expected, a company with predictable free cash flow is stable and good. A company with wild swings in its free cash flow warrants further research.
In general, the lower this number, the better.
|Free Cash Flow Jitter||60%|
Is Nova Measuring Instruments Ltd. Stock on Sale?
We believe that Nova Measuring Instruments Ltd. may be worth examining further. It's making money, which is a very positive sign. Is it on sale?
Nova Measuring Instruments Ltd. looks overpriced right now. If you're looking for a bargain in the stock market, you should probably look elsewhere for a great deal. This might still be a great stock to own—but it's not on sale right now.
Should You Buy NVMI Stock?
Does Nova Measuring Instruments Ltd. have a coherent story? Does it have a plan to continue to make money? Is it worth your time? Only you can decide where to go from here. Our investment guide helps you ask the right questions, including how to buy stocks. Use these research links for more information.