With a daily gain of 9.8%, yet a 3-month loss of -13.13%, Natera Inc (NTRA, Financial) presents an intriguing case for investors. The company's Loss Per Share stands at $4.82, prompting the question: is Natera significantly undervalued? This article embarks on a valuation analysis journey to uncover the answer and invites readers to delve into the following comprehensive assessment.
Company Introduction
Natera Inc (NTRA, Financial) is a diagnostic and research firm renowned for its proprietary molecular and bioinformatics technology. The company's flagship products, such as the Panorama Non-Invasive Prenatal Test (NIPT), Horizon Carrier Screening (HCS), Signatera, and Prospera, have solidified its position in the medical diagnostics and research industry. Despite the current stock price of $45.39, a stark contrast to the GF Value of $87.73 suggests that Natera's stock might be significantly undervalued. Here, we will juxtapose Natera's market performance against its GF Value to provide investors with a clearer picture of its potential worth.
Summarize GF Value
The GF Value is a unique measure that estimates the intrinsic value of a stock like Natera (NTRA, Financial). It factors in historical trading multiples, a GuruFocus adjustment based on past performance, and projected future business outcomes. When a stock trades below this calculated GF Value Line, it is often considered undervalued and thus likely to yield a higher future return. Natera's current market cap of $5.40 billion, coupled with its share price, indicates that it may be significantly undervalued, providing a potentially attractive long-term investment opportunity.
Because Natera is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength
Investors often seek companies with robust financial strength to minimize the risk of capital loss. Natera's cash-to-debt ratio of 2.17 surpasses over half of its industry peers. With a financial strength rating of 5 out of 10 from GuruFocus, Natera's financial stability is considered fair, which is an essential factor for investors to consider.
Profitability and Growth
Profitability is a critical indicator of a company's health, and Natera has shown mixed results. Despite generating $931.10 million in revenue over the past 12 months, the company's operating margin of -50.92% is concerning. However, Natera's growth prospects are brighter, with a 3-year average annual revenue growth of 24.2%, ranking well within its industry.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) offers insight into value creation. Unfortunately, Natera's ROIC of -138.89 is significantly below its WACC of 11.51, suggesting challenges in generating cash flow relative to the capital invested.
Conclusion
In summary, Natera (NTRA, Financial) appears to be significantly undervalued based on its GF Value. While the company's financial condition is fair and profitability poor, its growth outpaces a considerable portion of the Medical Diagnostics & Research industry. For a more detailed look at Natera's financial history, investors can review 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.
