NeoGenomics Inc (NEO, Financial) has recently experienced a notable daily loss of 5.29%, despite a substantial three-month gain of 42.19%. With a reported Loss Per Share of $0.77, investors are keenly questioning whether the stock is fairly valued. This article delves into a valuation analysis to uncover the answer, inviting readers to explore the intricate details of NeoGenomics' financial standing and market positioning.
Company Introduction
NeoGenomics operates a network of cancer-focused genetic testing laboratories, providing a variety of testing services such as Cytogenetics and Molecular testing. With a market cap of $2.40 billion and sales of $574.80 million, the company's financial and operational metrics are of keen interest to investors. A pivotal aspect of this evaluation is the comparison between NeoGenomics' stock price and the GF Value, an estimation of the stock's fair value. This comparison sets the stage for an in-depth valuation assessment.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, incorporating historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. NeoGenomics (NEO, Financial) appears to be fairly valued according to this metric. With a current price of $18.62 per share, the company's market cap stands at $2.40 billion, aligning closely with the GF Value. This suggests that the long-term return of NeoGenomics' stock may likely parallel the rate of its business growth.
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Financial Strength
Investing in companies with robust financial strength is crucial to mitigate the risk of capital loss. NeoGenomics' cash-to-debt ratio of 0.66 falls below the industry median, suggesting potential financial concerns. The company's financial strength is rated as fair by GuruFocus, with a score of 5 out of 10, indicating a need for cautious evaluation by investors.
Profitability and Growth
NeoGenomics has shown profitability in 5 out of the past 10 years, which is an important factor in assessing risk. However, with an operating margin of -17.6%, the company's performance is below the industry average. The profitability rank is deemed fair. Additionally, growth is a key determinant of a stock's valuation. NeoGenomics' 3-year average annual revenue growth rate of 1.3% is lower than the industry average, which may impact the long-term valuation.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) provides insight into its profitability and value creation. NeoGenomics' ROIC of -7.22 is less than its WACC of 10.41, indicating that the company may not be generating sufficient cash flow relative to its capital investment.
Conclusion
Overall, NeoGenomics (NEO, Financial) stock seems to be fairly valued, with a financial condition and profitability that are both rated as fair. However, the company's growth ranks poorly compared to its industry peers. For a more detailed exploration of NeoGenomics' financials, interested investors can refer to the company's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
