As of July 23, 2023, Bio-Rad Laboratories Inc (BIO, Financial) posted a gain of 4.01% with a closing price of $414.18. With a market cap of $11.9 billion and sales amounting to $2.8 billion, Bio-Rad Laboratories' stock appears to be significantly undervalued based on the GF Value of $612.61.
Headquartered in Hercules, California, Bio-Rad Laboratories develops, manufactures, and markets products and solutions for the clinical diagnostics and life sciences markets. The company owns 37% of Sartorius AG, a laboratory and biopharmaceutical supplier and operates globally with major markets in the Americas, Europe, Africa, and Asia-Pacific.
Understanding the GF Value
The GF Value is a proprietary valuation model developed by GuruFocus, estimating the intrinsic value of a stock based on historical trading multiples, a company's past business growth, and future performance predictions. A stock is considered overvalued if its price significantly exceeds the GF Value Line and undervalued if it falls substantially below. Currently, Bio-Rad Laboratories (BIO, Financial) is believed to be significantly undervalued, suggesting high future returns.
Financial Strength: A Key Consideration
Investors need to assess a company's financial strength to avoid the high risk of permanent capital loss. Key indicators of financial strength include the cash-to-debt ratio and interest coverage. Bio-Rad Laboratories' cash-to-debt ratio of 1.34 ranks lower than 60.58% of companies in the Medical Devices & Instruments industry, indicating fair financial strength.
Profitability and Growth
Profitable companies, particularly those with consistent profitability over the long term, are generally safer investments. Bio-Rad Laboratories has been profitable 9 out of the past 10 years, with an operating margin of 14.16%, ranking better than 73.08% of companies in the industry. However, its average annual revenue growth of 7.1% ranks worse than 50.49% of companies in the same industry.
ROIC Vs WACC
A comparison of a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can provide insight into its profitability. Over the past 12 months, Bio-Rad Laboratories' ROIC was 2.73, while its WACC stood at 8.1.
Conclusion
In conclusion, Bio-Rad Laboratories (BIO, Financial) appears to be significantly undervalued. The company's financial condition and profitability are fair, though its growth ranks lower than most companies in the Medical Devices & Instruments industry. For more details about Bio-Rad Laboratories stock, check out its 30-Year Financials here.
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