Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, business research provider The Advisory Board Company
With that in mind, let's take a closer look at Advisory Board's business and see what CAPS investors are saying about the stock right now.
Advisory Board facts
|Headquarters (Founded)||Washington, D.C. (1979)|
|Market Cap||$1.2 billion|
|Trailing-12-Month Revenue||$327.0 million|
|Management||CEO Robert Musslewhite (since 2008)
CFO Michael Kirshbaum (since 2006)
|Return on Equity (Average, Past 3 Years)||13.1%|
|Cash/Debt||$39.1 million / $0|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 44% of the 63 members who have rated Advisory Board believe the stock will underperform the S&P 500 going forward. These bears include All-Stars BuffettJunior1 and TSIF, both of whom are ranked in the top 10% of our community.
Just last month, BuffettJunior1 touched on Advisory Board's seemingly unsustainable valuation: "Unless this company can grow at over 50% per year over the next 10 years, I don't think its worth over a billion dollars, as its market cap suggests."
In fact, Advisory Board sports a particularly lofty P/E of 65. That represents a clear premium to competitors like Accenture (17), Cerner (38), and McKesson (18).
While Advisory Board's stock price has remained resilient, CAPS All-Star TSIF says he's cautiously sticking to the underperform call:
My theory was that with the high valuation that it would certainly disappoint at some point. The health care industry has been taking hits as the government clamps down. A company that specializes in advice would seem to be a luxury that it's customers couldn't afford, but the crunch apparently gives The Advisory Board Company a much needed value add. ...
Growth does appear to be slowing. ... Margins are not supporting growth.
What do you think about Advisory Board, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Accenture and McKesson. Try any of our Foolish newsletter services free for 30 days.