Stock Analysis: Affordable Growth

Fundamental Rating

We assign a fundamental rating of 7 out of 10 to GCT. GCT was compared to 13 industry peers in the Distributors industry. GCT has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. GCT is evaluated to be cheap and growing strongly. This does not happen too often! With these ratings, GCT could be worth investigating further for value and growth and quality investing!.

1. Profitability

1.1 Basic Checks

GCT had positive earnings in the past year.

In the past year GCT had a positive cash flow from operations.

GCT had positive earnings in each of the past 5 years.

In the past 5 years GCT always reported a positive cash flow from operatings.

1.2 Ratios

Looking at the Return On Assets, with a value of 11.11%, GCT belongs to the top of the industry, outperforming 91.67% of the companies in the same industry.

GCT has a Return On Equity of 32.39%. This is amongst the best in the industry. GCT outperforms 91.67% of its industry peers.

GCT has a Return On Invested Capital of 14.04%. This is amongst the best in the industry. GCT outperforms 91.67% of its industry peers.

GCT had an Average Return On Invested Capital over the past 3 years of 15.64%. This is above the industry average of 10.92%.

		Industry Rank	Sector Rank
ROA	11.11%
ROE	32.39%
ROIC	14.04%

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

GCT has a Profit Margin of 13.37%. This is amongst the best in the industry. GCT outperforms 91.67% of its industry peers.

GCT's Profit Margin has improved in the last couple of years.

GCT's Operating Margin of 16.11% is amongst the best of the industry. GCT outperforms 91.67% of its industry peers.

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

GCT has a Gross Margin (26.81%) which is in line with its industry peers.

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

		Industry Rank	Sector Rank
OM	16.11%
PM (TTM)	13.37%
GM	26.81%

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

GCT has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.

GCT has more shares outstanding than it did 1 year ago.

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

2.2 Solvency

An Altman-Z score of 3.37 indicates that GCT is not in any danger for bankruptcy at the moment.

GCT has a Altman-Z score of 3.37. This is comparable to the rest of the industry: GCT outperforms 58.33% of its industry peers.

GCT has a debt to FCF ratio of 0.01. This is a very positive value and a sign of high solvency as it would only need 0.01 years to pay back of all of its debts.

GCT has a better Debt to FCF ratio (0.01) than 91.67% of its industry peers.

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

The Debt to Equity ratio of GCT (0.00) is better than 83.33% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.01
Altman-Z	3.37

ROIC/WACC1.43

WACC9.82%

2.3 Liquidity

GCT has a Current Ratio of 1.91. This is a normal value and indicates that GCT is financially healthy and should not expect problems in meeting its short term obligations.

Looking at the Current ratio, with a value of 1.91, GCT is in line with its industry, outperforming 58.33% of the companies in the same industry.

A Quick Ratio of 1.27 indicates that GCT should not have too much problems paying its short term obligations.

With a decent Quick ratio value of 1.27, GCT is doing good in the industry, outperforming 75.00% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	1.91
Quick Ratio	1.27

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

GCT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 538.54%, which is quite impressive.

Measured over the past years, GCT shows a very strong growth in Earnings Per Share. The EPS has been growing by 92.98% on average per year.

Looking at the last year, GCT shows a very strong growth in Revenue. The Revenue has grown by 43.63%.

The Revenue has been growing by 36.70% on average over the past years. This is a very strong growth!

EPS 1Y (TTM)538.54%

EPS 3Y92.98%

EPS 5YN/A

EPS growth Q2Q224.14%

Revenue 1Y (TTM)43.63%

Revenue growth 3Y36.7%

Revenue growth 5YN/A

Revenue growth Q2Q94.85%

3.2 Future

Based on estimates for the next years, GCT will show a very strong growth in Earnings Per Share. The EPS will grow by 26.50% on average per year.

The Revenue is expected to grow by 33.48% on average over the next years. This is a very strong growth

EPS Next Y35.85%

EPS Next 2Y30.85%

EPS Next 3Y26.5%

EPS Next 5YN/A

Revenue Next Year61.88%

Revenue Next 2Y38.94%

Revenue Next 3Y33.48%

Revenue Next 5YN/A

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 15.16 indicates a correct valuation of GCT.

Based on the Price/Earnings ratio, GCT is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.

When comparing the Price/Earnings ratio of GCT to the average of the S&P500 Index (28.91), we can say GCT is valued slightly cheaper.

With a Price/Forward Earnings ratio of 12.40, GCT is valued correctly.

83.33% of the companies in the same industry are more expensive than GCT, based on the Price/Forward Earnings ratio.

When comparing the Price/Forward Earnings ratio of GCT to the average of the S&P500 Index (20.51), we can say GCT is valued slightly cheaper.

		Industry Rank	Sector Rank
PE	15.16
Fwd PE	12.4

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, GCT is valued a bit cheaper than the industry average as 66.67% 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 66.67% of the companies listed in the same industry.