Lantronix’s common shares will need to reach $7 to achieve average annual stock market performance of 9.0% over the next 6 years. Upper quartile performance will require a $8 Lantronix stock price by 2029. At the current price of $4, what is the market’s view of Lantronix’s future operating performance?
Executive Summary
- Key Lantronix characteristics: above average financial strength, instability, average profitability, and below average expected growth. A big positive influence on Lantronix’s valuation is its superior Growth.
- Average valuation, above market shareholder returns. Current valuation levels are average relative to the Lantronix Peer Group. Recent market returns have outperformed the Lantronix Peer Group. Total shareholder returns expected to lag the overall equity market. Based on current investor expectations, Lantronix shares should reach a level of $6 by 2029 — an 7.2% per year total shareholder return. A 2029 stock price of $7 would reflect median performance and a price of $8 would be required to reach upper quartile performance.
- Growth has been Lantronix’s biggest valuation strength. Historical growth has been very high relative to the Lantronix Peer Group and forecasted growth is relatively below average. Asset Growth, Revenue Growth, and Equity Growth have been superior. These factors have buoyed market perceptions of Lantronix. Lantronix’s historical income statement and balance sheet growth are not available. Lantronix’s consensus growth expectations are lower than historical growth.
- Profitability is slightly above average. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
- Lantronix’s risk profile is neutral. Overall variability has been only average with only average revenue variability, very low E.P.S. variability, and very high stock price volatility. Financial Strength is only average and earnings’ expectations are below average. The debt/capital ratio has risen very significantly.
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