|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
CR Bard Focuses on Small to Medium-Sized Deals
Posted by: Victor Selva (IP Logged)
Date: April 4, 2014 10:30PM
CR Bard Inc. (BCR) designs, manufactures, packages, distributes and sells medical, surgical, diagnostic and patient care devices. The company has four main product group categories: vascular, urology, oncology and surgical specialties.
In this article, let's take a look at this company and try to explain to investors the reasons this is an apparently appealing investment.
Small to Medium-Sized Acquisitions
The company hopes to generate higher sales through specific acquisitions. In January 2005, Bard acquired the assets of Genyx Medical Inc. In April 2006, it purchased Venetec International Inc and in January 2006, Bard acquired assets from privately held PST LLC. In January 2008, it acquired the LifeStent peripheral vascular product line from Edwards Lifesciences Corp. Moreover, the acquisitions of Medivance, Lutonix, Neomend, as well as the most recent acquisition of privately-held Medafor, are expected to expand the business opportunities for Bard.
New Product Development
The company plans to make efforts to develop new products. The company seeks to develop and acquire technologies that will furnish health care providers with a more complete line of products to treat medical conditions through less invasive procedures and in a cost-efficient manner.
The company is focusing on emerging markets, because is heavily investing in certain countries in Europe, Asia and Latin America. Additionally, Japan is also considered to be a major growth driver for the company.
The firm is currently Zacks Rank # 2 – Buy, and it also has a longer-term recommendation of “Neutral”. For investors looking for a better Zacks Rank, there is no better option.
In terms of valuation, the stock sells at a trailing P/E of 17.4x, trading at a discount compared to an average of 23x for the industry. To use another metric, its price-to-book ratio of 5.5x indicates a premium versus the industry average of 2.8x and the price-to-sales ratio of 3.9x is above the industry average of 2.62x. Two metrics indicate that the stock is relatively overvalued.
Bard reported strong Q4 results beating the Zacks Consensus Estimate. Earnings per share (EPS) increased in the most recent quarter compared to the same quarter a year ago (from $1.52 to $8.28). In the next graph we can see that it has demonstrated an interesting positive trend in the last ten years and we include the stock price because EPS often lead the stock price movement.
Finally, I always like to see one of the most important financial ratios applying to stockholders, the best measure of performance for a firm's management: the return on equity. The ratio has increased from the same quarter one year prior. This is a clear sign of strength within the company.
Let´s compare the current ratio with the peer group in the next table:
The company has a very attractive current ratio of 33.03% which is higher than its comps: Becton Dickinson & Co (BDX), Cardinal Health Inc (CAH), Cooper Companies (COO) and Luxottica Group S.p.A. (LUX).
As outlined in this article, new product introductions, new markets to enter and consolidate; and strategic acquisitions that boost the potential of the new business structure are long term growth drivers.
I would recommend investors to consider adding the stock for their long-term portfolios. Vanguard Health Care Fund (Trades, Portfolio) run by Mr. Edward Owens, who invests primarily in health care companies, has also invested in it in Q4 2013.
Disclosure: Victor Selva holds no position in any stocks mentioned.
Stocks Discussed: BCR, BDX, CAH, COO, LUX,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.