Twist Bioscience Corp (TWST, Financial) recently showcased a notable daily gain of 11.94% and a three-month gain of 28.15%. Despite these impressive short-term gains, the company reports a Loss Per Share of $3.36. This raises an important question for investors and analysts alike: Is Twist Bioscience fairly valued at its current market price? This article delves into the intrinsic value of Twist Bioscience, leveraging the GF Value to determine whether the stock stands as a prudent investment.
Company Overview
Twist Bioscience operates within the synthetic biology sector, developing a revolutionary DNA synthesis platform that significantly enhances the speed and cost-effectiveness of high-quality synthetic DNA production. The majority of its revenue is generated in the United States, positioning it as a key player in the biotechnology field. Currently, Twist Bioscience's stock is trading at $47.43 per share, with a GF Value estimated at $43.91, suggesting a close alignment with its fair market value.
Detailed GF Value Analysis
The GF Value is a unique measure that considers historical trading multiples such as PE Ratio, PS Ratio, PB Ratio, and Price-to-Free-Cash-Flow, alongside a GuruFocus adjustment factor based on past returns and growth, and projected future business performance. For Twist Bioscience, the GF Value indicates that the stock is fairly priced, aligning closely with its current market rate. This assessment suggests that the long-term return of Twist Bioscience's stock should mirror the rate of its business growth, barring significant market fluctuations.
Financial Strength and Stability
Investing in companies with robust financial health minimizes the risk of capital loss. Twist Bioscience boasts a cash-to-debt ratio of 3.28, outperforming 65.37% of its peers in the Medical Diagnostics & Research industry. This strong financial position is reflected in its GuruFocus financial strength rating of 8 out of 10.
Profitability and Growth Metrics
Despite a challenging operating margin of -68.89%, Twist Bioscience's revenue growth outpaces 81.19% of its industry counterparts. However, its profitability rank remains low at 2 out of 10, indicating a need for improvement in this area. The company's growth metrics, particularly a 3-year average EBITDA growth rate of 3.2%, suggest moderate business expansion.
Comparative Analysis of ROIC and WACC
An insightful way to evaluate a company's profitability is by comparing its Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC). Currently, Twist Bioscience's ROIC stands at -46.79%, significantly below its WACC of 17.99%, indicating that the company is not generating adequate returns on its capital investments.
Final Thoughts
While Twist Bioscience appears to be fairly valued according to the GF Value, its financial strength is robust, yet profitability remains a concern. The company's growth indicators provide a mixed view, suggesting cautious optimism for potential investors. For a deeper dive into Twist Bioscience's financials, consider exploring its 30-Year Financials.
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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.
