With a daily gain of 3.33%, a 3-month loss of 35.34%, and a Loss Per Share of 5.85, Bio-Rad Laboratories Inc (BIO, Financial) has attracted the attention of many investors. The question that arises is whether the stock is significantly undervalued. This article aims to provide a detailed valuation analysis to answer this question. Read on to gain a deeper understanding of the company's intrinsic value.
Company Introduction
Bio-Rad Laboratories, based in Hercules, California, develops, manufactures, and markets products and solutions for the clinical diagnostics and life sciences markets. The company's major markets are the Americas, Europe and Africa, and Asia-Pacific. The company's stock price currently stands at $278.35, while the GF Value, an estimation of fair value, is $520.35. This discrepancy paves the way for a more profound exploration of the company's value.
Understanding the GF Value
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. It is calculated based on historical multiples, GuruFocus adjustment factor, and future business performance estimates. 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.
The stock of Bio-Rad Laboratories (BIO, Financial) is estimated to be significantly undervalued, according to GuruFocus Value calculation. At its current price of $278.35 per share and the market cap of $8.10 billion, Bio-Rad Laboratories stock is estimated to be significantly undervalued. Because Bio-Rad Laboratories is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Bio-Rad Laboratories has a cash-to-debt ratio of 1.47, which ranks worse than 58.97% of 831 companies in the Medical Devices & Instruments industry. Based on this, GuruFocus ranks Bio-Rad Laboratories's financial strength as 7 out of 10, suggesting a fair balance sheet.
Profitability and Growth
Investing in profitable companies carries less risk. Bio-Rad Laboratories has been profitable 9 years over the past 10 years. During the past 12 months, the company had revenues of $2.70 billion and a Loss Per Share of $5.85. Its operating margin of 13.28% is better than 71.53% of 829 companies in the Medical Devices & Instruments industry. Overall, GuruFocus ranks Bio-Rad Laboratories's profitability as fair.
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 51.1% of 726 companies in the Medical Devices & Instruments industry. The 3-year average EBITDA growth rate is 0%, which ranks worse than 0% of 727 companies in the Medical Devices & Instruments industry.
ROIC vs WACC
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average 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 exceeds the WACC, the company is likely creating value for its shareholders. During the past 12 months, Bio-Rad Laboratories's ROIC is 2.95 while its WACC came in at 8.4.
Conclusion
In summary, the stock of Bio-Rad Laboratories (BIO, Financial) is estimated to be significantly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks worse than 0% of 727 companies in the Medical Devices & Instruments industry. To learn more about Bio-Rad Laboratories stock, you can check out its 30-Year Financials here.
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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.
