Despite a daily loss of 3.39% and a 3-month loss of 12.69%, Bio-Rad Laboratories Inc (BIO, Financial) reported a Loss Per Share of $15.01. This raises the question: is the stock significantly undervalued? In this article, we will explore this question by analyzing the company's valuation. We invite you to join us in this comprehensive exploration of Bio-Rad Laboratories' intrinsic value.
Company Overview
Bio-Rad Laboratories, headquartered in Hercules, California, is a leading company in the clinical diagnostics and life sciences markets. The company develops, manufactures, and markets products and solutions for these markets. Bio-Rad Laboratories has a diverse geographic footprint, with significant markets in the Americas, Europe and Africa, and the Asia-Pacific region. The company owns a 37% stake in Sartorius AG, a laboratory and biopharmaceutical supplier.
As of October 17, 2023, Bio-Rad Laboratories (BIO, Financial) has a market cap of $9.90 billion and a stock price of $339.19 per share. The company's GF Value, a measure of its fair value, stands at $578.37, suggesting that the stock is significantly undervalued.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is computed based on historical trading multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded.
Bio-Rad Laboratories (BIO, Financial) is considered significantly undervalued according to GuruFocus' valuation method. The GF Value estimates the stock's fair value based on three key factors: historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. Because Bio-Rad Laboratories is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
Link: These companies may deliver higher future returns at reduced risk.
Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. To avoid this, it's crucial to review a company's financial strength before deciding to purchase shares. Bio-Rad Laboratories has a cash-to-debt ratio of 1.25, ranking worse than 62.02% of 832 companies in the Medical Devices & Instruments industry. The overall financial strength of Bio-Rad Laboratories is 7 out of 10, indicating fair financial strength.
Profitability and Growth
Investing in profitable companies is less risky, especially those with consistent profitability over the long term. Bio-Rad Laboratories has been profitable 9 out of the past 10 years. Over the past twelve months, the company had a revenue of $2.80 billion and a Loss Per Share of $15.01. Its operating margin is 13.11%, which ranks better than 70.93% of 829 companies in the Medical Devices & Instruments industry. Overall, the profitability of Bio-Rad Laboratories is ranked 7 out of 10, indicating fair profitability.
Growth is probably the most important factor in the valuation of a company. The 3-year average annual revenue growth rate of Bio-Rad Laboratories is 7.1%, which ranks worse than 51.24% of 726 companies in the Medical Devices & Instruments industry. The 3-year average EBITDA growth rate is 0%, which ranks worse than 0% of 729 companies in the Medical Devices & Instruments industry.
ROIC vs WACC
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). 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. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Bio-Rad Laboratories's ROIC was 2.77, while its WACC came in at 8.79.
Conclusion
In summary, the stock of Bio-Rad Laboratories (BIO, Financial) is believed to be significantly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks worse than 0% of 729 companies in the Medical Devices & Instruments industry. To learn more about Bio-Rad Laboratories stock, you can check out its 30-Year Financials here.
To find out the high-quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
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.
