The stock of Revvity Inc (RVTY, Financial) experienced a daily loss of 4.01% and a 3-month loss of 4.7%. Despite these losses, the company reported Earnings Per Share (EPS) (EPS) of 6.54. The question now is: is the stock fairly valued? In this article, we will explore the valuation of Revvity (RVTY) and provide an in-depth analysis of its financial health and prospects. We encourage you to read on for a comprehensive understanding of this stock's value.
Company Introduction
Revvity Inc (RVTY, Financial) is a significant player in the pharmaceutical, biomedical, chemical, environmental, and general industrial markets. The company provides a broad range of products and services, from genetic screening and environmental analytical tools to informatics and enterprise software. Operating in two segments, diagnostics, and discovery and analytical solutions, Revvity has carved out a niche for itself in these industries. As of September 06, 2023, the company's stock price stands at 108.73, while its GF Value, an estimation of fair value, is $111.72.
Understanding the GF Value
The GF Value is a proprietary measure that provides an estimation of a stock's intrinsic value. This measure takes into account historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line gives an overview of the fair value at which the stock should ideally be traded. If the stock price 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.
Revvity's current stock price of $108.73 per share suggests that it is fairly valued according to the GF Value Line. Since Revvity 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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Assessing Revvity's Financial Strength
Before investing in a company, it's crucial to assess its financial strength. Companies with poor financial strength pose a higher risk of permanent loss. A useful way to understand a company's financial strength is by looking at its cash-to-debt ratio and interest coverage. Revvity has a cash-to-debt ratio of 0.46, which is worse than 69% of 229 companies in the Medical Diagnostics & Research industry. The overall financial strength of Revvity is 6 out of 10, indicating that it is fair.
Profitability and Growth
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. A company with high profit margins offers better performance potential than a company with low profit margins. Revvity has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $2.80 billion and Earnings Per Share (EPS) of $6.54. Its operating margin of 13.66% is better than 74.11% of 224 companies in the Medical Diagnostics & Research industry. Overall, GuruFocus ranks Revvity's profitability as strong.
Growth is probably the most important factor in the valuation of a company. A faster-growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Revvity is 0.4%, which ranks worse than 73.53% of 204 companies in the Medical Diagnostics & Research industry. The 3-year average EBITDA growth rate is 26.5%, which ranks better than 70.21% of 188 companies in the Medical Diagnostics & Research industry.
Another method of determining the profitability of a company is to compare its return on invested capital to the weighted average cost of capital. 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. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Revvity's return on invested capital is 2.47, and its cost of capital is 7.36.
Conclusion
In conclusion, the stock of Revvity (RVTY, Financial) shows every sign of being fairly valued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 70.21% of 188 companies in the Medical Diagnostics & Research industry. To learn more about Revvity stock, you can check out its 30-Year Financials here.
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