Thermo Fisher Scientific Inc (TMO, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $499.01, Thermo Fisher Scientific Inc has witnessed a daily gain of 0.65%, marked against a three-month change of -3.53%. A thorough analysis, underlined by the GF Score, suggests that Thermo Fisher Scientific Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Thermo Fisher Scientific Inc's GF Score components are as follows:
- Financial strength rank: 6/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 7/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high growth rank and a solid profitability rank, GuruFocus assigned Thermo Fisher Scientific Inc the GF Score of 94 out of 100, which signals the highest outperformance potential.
Thermo Fisher Scientific Inc Business Overview
Thermo Fisher Scientific Inc, with a market cap of $192.6 billion, is a leading provider of scientific instruments and laboratory equipment, diagnostics consumables, and life science reagents. The firm operates through four segments as of mid-2023: analytical technologies (16% of sales); specialty diagnostic products (10%); life science solutions (24%); and lab products and services, which includes CRO services (54%). The company's sales stand at $43.5 billion with an operating margin of 16.3%.
Financial Strength Analysis
According to the Financial Strength rating, Thermo Fisher Scientific Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Thermo Fisher Scientific Inc stands impressively at 6.64, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.78, Thermo Fisher Scientific Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Thermo Fisher Scientific Inc's impressive standing among its peers in generating profit. Thermo Fisher Scientific Inc Operating Margin has increased (20.36%) over the past five years, as shown by the following data: 2018: 15.74; 2019: 16.37; 2020: 24.50; 2021: 26.08; 2022: 18.94. Thermo Fisher Scientific Inc's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Thermo Fisher Scientific Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 21.6%, which outperforms better than 72.55% of 204 companies in the Medical Diagnostics & Research industry. Moreover, Thermo Fisher Scientific Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 20.2, and the rate over the past five years is 21.3. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Thermo Fisher Scientific Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
