When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The 3-year average EBITDA growth rate is -145.2%, which ranks in the bottom 10% of the companies in Oil & Gas industry.Īnother method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. The 3-year average annual revenue growth rate of Torchlight Energy Resources is -41.5%, which ranks in the bottom 10% of the companies in Oil & Gas industry.
![torchlight energy stock torchlight energy stock](https://s3.tradingview.com/l/LbvLanJA_mid.png)
The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. GuruFocus research has found that growth is closely correlated with the long term performance of a company's stock. Growth is probably the most important factor in the valuation of a company. Torchlight Energy Resources Stock Appears To Be Significantly Overvalued Warning! GuruFocus has detected 8 Warning Signs with TRCH. GF Value for Torchlight Energy Resources is shown in the chart below. At its current price of $1.85 per share and the market cap of $268.8 million, Torchlight Energy Resources stock shows every sign of being significantly overvalued. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher.
![torchlight energy stock torchlight energy stock](https://i.ytimg.com/vi/vWfwElJnagk/maxresdefault.jpg)
If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance.
![torchlight energy stock torchlight energy stock](https://pennystocks.com/wp-content/uploads/2021/06/Penny_Stocks_to_Watch_Torchlight_Energy_Resources_Inc_TRCH_Stock-1.jpg)
GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. The stock of Torchlight Energy Resources ( NAS:TRCH, 30-year Financials) is believed to be significantly overvalued, according to GuruFocus Value calculation.