As of July 19, 2023, Bio-Rad Laboratories Inc (BIO, Financial) is trading at $397.07 per share, marking a 3.24% change for the day. With a market cap of $11.6 billion, the company's GF Value stands at $612.23, indicating an undervalued status. This significant undervaluation suggests that the long-term return of Bio-Rad Laboratories' stock is likely to outpace its business growth.
Bio-Rad Laboratories, based in Hercules, California, is a leading player in the clinical diagnostics and life sciences markets. The company develops, manufactures, and markets products and solutions, with diagnostics accounting for 53% of sales and life sciences making up the remaining 47%. Bio-Rad Laboratories operates globally, with key markets in the Americas, Europe, Africa, and Asia-Pacific. The company owns a 37% stake in Sartorius AG, a renowned laboratory and biopharmaceutical supplier.
Financial Strength
Before investing in a company, it's crucial to evaluate its financial strength. Companies with weak financials pose a higher risk of permanent loss. A useful tool for understanding a company's financial strength is the cash-to-debt ratio. Bio-Rad Laboratories' cash-to-debt ratio stands at 1.34, which is lower than 60.81% of companies in the Medical Devices & Instruments industry. The overall financial strength of Bio-Rad Laboratories is rated 7 out of 10, indicating a fair financial condition.
Profitability
Investing in profitable companies typically carries less risk. Bio-Rad Laboratories has been profitable in 9 out of the past 10 years, generating revenues of $2.8 billion over the past 12 months. Despite an EPS of $-6.54, the company's operating margin of 14.16% is better than 72.96% of companies in the Medical Devices & Instruments industry. GuruFocus ranks Bio-Rad Laboratories' profitability as fair.
Growth
Growth is a vital factor in a company's valuation. Companies that grow faster typically create more value for shareholders. Bio-Rad Laboratories' average annual revenue growth is 7.1%, ranking lower than 50.56% of companies in the Medical Devices & Instruments industry. The 3-year average EBITDA growth is 0%, which is lower than the industry average.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate profitability. Bio-Rad Laboratories' ROIC stands at 2.73, while its WACC is at 8.02. This indicates that the company is not creating value for shareholders.
Conclusion
In conclusion, Bio-Rad Laboratories Inc (BIO, Financial) appears to be significantly undervalued. The company's financial condition and profitability are rated as fair. However, its growth ranks lower than most companies in the Medical Devices & Instruments industry. For more information about Bio-Rad Laboratories' stock, check out its 30-Year Financials here.
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