XPEL Inc

XPEL Inc is assigned a 3-star quantitative star rating, illustrating our stance that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a minor 1% discount to our quantitative fair value estimate of $45.65 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The company's solid growth strengthens our estimated fair value. Consistent revenue and earnings growth indicates a company's potential for increased market share and profitability. For example, the firm's EPS 5-year growth of 11.9% falls in the top 40% compared with peers globally. The robust five-year track record of EPS growth is reason to be optimistic about the firm's shares. We believe this is a sign that shares could be cheap.

Conversely, the company's valuation metrics are potentially concerning. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's book value yield of 24.7%, for example, sits in the bottom 30% globally. The market value of this company's shares looks expensive relative to the book (accounting) value of equity, which, despite our favorable price/fair value ratio, is a negative attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is undervalued, this outperformance had a negative impact on our valuation estimate.

The company's narrow quantitative moat rating indicates it could outearn its cost of capital and maintain robust margins for 10 years or longer. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.