Trinity Biotech PLC (TRIB, Financial), with a daily gain of 10.65%, has seen a 3-month loss of -18.7%. The company reported a Loss Per Share of 0.91. The question that arises is whether the stock is fairly valued. This article presents a valuation analysis of Trinity Biotech PLC (TRIB), encouraging readers to further explore the financials of the company.
Company Introduction
Trinity Biotech PLC is a global player in the development, manufacturing, and marketing of clinical diagnostic products. The products are used to detect autoimmune, infectious, sexually transmitted diseases, diabetes, and disorders of the liver and intestine. The company also provides raw materials to the life sciences and research industries globally. It markets products under the brand names Recombigen, Unigold, MarBlot, Mardx, Premier, Immublot, EZ, Capita, and others. The majority of its revenues come from the Americas segment.
Comparing the stock price of $0.8 per share with the GF Value of $0.77 provides an estimation of fair value. This comparison sets the stage for a deeper exploration of the company's value, integrating financial assessment with essential company details.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded. It is calculated based on three factors:
- Historical multiples (PE Ratio, PS Ratio, PB Ratio and Price-to-Free-Cash-Flow) at which the stock has traded.
- GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of the business performance.
According to GuruFocus Value calculation, the stock of Trinity Biotech PLC (TRIB, Financial) is believed to be fairly valued. The fair value is an estimate of the price at which the stock should ideally be traded. 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. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $0.8 per share and the market cap of $30.60 million, Trinity Biotech PLC stock is believed to be fairly valued.
Since Trinity Biotech PLC is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. Looking at the cash-to-debt ratio and interest coverage can provide a good initial perspective on the company's financial strength. Trinity Biotech PLC has a cash-to-debt ratio of 0.05, which ranks worse than 94.67% of 225 companies in the Medical Diagnostics & Research industry. Based on this, GuruFocus ranks Trinity Biotech PLC's financial strength as 3 out of 10, suggesting a poor balance sheet.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. A company with high profit margins is usually a safer investment than those with low profit margins. Trinity Biotech PLC has been profitable 4 times over the past 10 years. Over the past twelve months, the company had a revenue of $73.90 million and a Loss Per Share of $0.91. Its operating margin is -18.42%, which ranks worse than 59.64% of 223 companies in the Medical Diagnostics & Research industry. Overall, the profitability of Trinity Biotech PLC is ranked 5 out of 10, indicating fair profitability.
One of the most important factors in the valuation of a company is growth. Long-term stock performance is closely correlated with growth, according to GuruFocus research. Companies that grow faster create more value for shareholders, especially if that growth is profitable. The average annual revenue growth of Trinity Biotech PLC is -14.5%, which ranks worse than 87.62% of 202 companies in the Medical Diagnostics & Research industry. The 3-year average EBITDA growth is 16.6%, which ranks better than 56.32% of 190 companies in the Medical Diagnostics & Research industry.
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. 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. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Trinity Biotech PLC's ROIC was -17.6, while its WACC came in at 24.05.
Conclusion
In conclusion, the stock of Trinity Biotech PLC (TRIB, Financial) is believed to be fairly valued. The company's financial condition is poor, and its profitability is fair. Its growth ranks better than 56.32% of 190 companies in the Medical Diagnostics & Research industry. To learn more about Trinity Biotech PLC stock, you can check out its 30-Year Financials here.
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