Unveiling Natera (NTRA)'s Value: Is It Really Priced Right? A Comprehensive Guide

An in-depth look at Natera Inc's valuation and financial performance

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Despite a daily loss of 5.21% and a 3-month gain of 4.21%, Natera Inc (NTRA, Financial) reported a Loss Per Share of 4.82. This raises the question: is the stock significantly undervalued? In this article, we delve into the valuation analysis of Natera, providing insights to help you make informed investment decisions.

Introduction to Natera Inc

Natera Inc is a diagnostic and research company with proprietary molecular and bioinformatics technology. The company's key product offerings include its Panorama Non-Invasive Prenatal Test (NIPT), Horizon Carrier Screening (HCS), Signatera molecular residual disease (MRD) test, and Prospera, to assess organ transplant rejection. With a current stock price of $52.61 and a GF Value of $86.56, Natera Inc, with a market cap of $6.30 billion, appears to be significantly undervalued. Here is a snapshot of Natera's income breakdown:


Understanding GF Value

The GF Value is a proprietary measure that reflects the intrinsic value of a stock. It is computed based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides 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.

According to GuruFocus' valuation method, Natera (NTRA, Financial) is significantly undervalued. With a current price of $52.61 per share and a market cap of $6.30 billion, the stock is likely to deliver higher long-term returns than its business growth due to its significant undervaluation.


Assessing Financial Strength

Investing in companies with poor financial strength carries a higher risk of permanent capital loss. Therefore, it is crucial to review a company's financial strength before deciding to invest in its stock. Natera's cash-to-debt ratio of 1.66 is better than 53.28% of companies in the Medical Diagnostics & Research industry, indicating fair financial strength.

Here's a look at Natera's debt and cash over the past years:


Profitability and Growth

Investing in profitable companies, especially those with consistent profitability over the long term, poses less risk. Natera has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $931.10 million and a Loss Per Share of $4.82. Its operating margin is -54.94%, ranking worse than 67.26% of companies in the Medical Diagnostics & Research industry. This indicates poor profitability.

On the growth front, Natera's 3-year average revenue growth rate is better than 75.61% of companies in the industry. However, its 3-year average EBITDA growth rate is -52.2%, ranking worse than 93.16% of companies in the industry.


Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) is another way to evaluate its profitability. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Natera's ROIC was -145.73, while its WACC came in at 10.2.

Here is the historical ROIC vs WACC comparison of Natera:



Overall, Natera (NTRA, Financial) stock is believed to be significantly undervalued. The company's financial condition is fair, but its profitability is poor, and its growth ranks worse than 93.16% of companies in the Medical Diagnostics & Research industry. To learn more about Natera stock, you can check out its 30-Year Financials here.

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