Haemonetics Corp (HAE, Financial) recently experienced a daily loss of 6.74%, contributing to a 3-month decline of 3.85%. With an Earnings Per Share (EPS) of $2.49, investors are keen to understand if the stock is fairly valued. This article delves into the valuation analysis of Haemonetics, aiming to provide insights into whether the current stock price reflects the company's intrinsic value.
Company Overview
Haemonetics Corp operates in the medical products and solutions sector, focusing on blood and plasma component collection, as well as surgical suite and hospital transfusion services. With a market cap of $4.20 billion and sales of $1.20 billion, Haemonetics is a notable player in its industry. The company's primary focus is on its plasma and hospital segments, which show significant growth potential compared to the highly competitive blood center segment. The fair value of Haemonetics (GF Value) is estimated at $90.85, poised closely to its current stock price of $83.21, suggesting a balanced valuation.
Understanding GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, accounting for historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. Haemonetics (HAE, Financial) is currently considered fairly valued according to this measure. The stock's future returns are projected to align closely with the company's business growth, given that its price is near the GF Value Line. This equilibrium suggests a stable investment outlook for Haemonetics.
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Financial Strength
Assessing a company's financial strength is crucial to avoid the risk of permanent capital loss. Haemonetics has a cash-to-debt ratio of 0.46, which ranks lower than 77.51% of the companies in the Medical Devices & Instruments industry. However, with a financial strength rating of 7 out of 10, Haemonetics' financial position is considered fair.
Profitability and Growth
Haemonetics has a track record of profitability, with 8 profitable years over the past decade. The company's operating margin of 14.36% ranks better than 73.7% of its industry peers. In terms of growth, Haemonetics has a 3-year average revenue growth rate that lags behind 54.55% of the companies in the Medical Devices & Instruments industry, and its EBITDA growth rate also ranks lower than average.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is another way to gauge profitability. Haemonetics' ROIC of 9.33% is higher than its WACC of 6.13%, indicating value creation for shareholders.
Conclusion
In conclusion, Haemonetics (HAE, Financial) appears to be fairly valued, reflecting a balance between price and company performance. The financial condition and profitability of Haemonetics are deemed fair, but its growth is not leading the industry. For a deeper dive into Haemonetics' financials, investors can explore the 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.
