With a day's loss of -2.26%, a 3-month loss of -17.45%, and a Loss Per Share of 0.16, Pacira BioSciences Inc (PCRX, Financial) has been generating significant interest among investors. The question is, is this stock significantly undervalued? In this analysis, we delve into the valuation of Pacira BioSciences (PCRX) to provide a comprehensive perspective on its intrinsic value. Read on to discover our findings.
Company Introduction
Pacira BioSciences Inc is a leading provider of non-opioid pain management and regenerative health solutions. The company is committed to improving outcomes for healthcare practitioners and their patients. Among its innovative solutions is EXPAREL, which utilizes DepoFoam, a product delivery technology that encapsulates drugs without altering their molecular structure, and releases them over a desired period of time. With a current stock price of $32.45, and a market cap of $1.50 billion, the GF Value of Pacira BioSciences is estimated to be $69.91, suggesting that the stock is significantly undervalued.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is derived from a unique method that takes into account historical trading multiples, a GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should be traded. If the stock price is significantly above the GF Value Line, it is considered 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.
Based on this method, Pacira BioSciences (PCRX, Financial) appears to be significantly undervalued. Its current price of $32.45 per share is considerably below the GF Value Line, suggesting high future returns. Given this, it is expected that the long-term return of Pacira BioSciences stock will be much higher than its business growth.
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Financial Strength
Investing in companies with low financial strength could result in permanent capital loss, hence the need to carefully review a company's financial strength before deciding to buy shares. Pacira BioSciences has a cash-to-debt ratio of 0.36, which ranks worse than 65.5% of 1058 companies in the Drug Manufacturers industry. Based on this, GuruFocus ranks Pacira BioSciences's financial strength as 5 out of 10, suggesting fair balance sheet.
Profitability and Growth
Investing in profitable companies, especially those that have demonstrated consistent profitability over the long term, poses less risk. Pacira BioSciences has been profitable 4 over the past 10 years. Over the past twelve months, the company had a revenue of $669.20 million and a Loss Per Share of $0.16. Its operating margin is 10.21%, which ranks better than 62.99% of 1051 companies in the Drug Manufacturers industry. Overall, GuruFocus ranks the profitability of Pacira BioSciences at 6 out of 10, which indicates fair profitability.
Growth is a critical factor in the valuation of a company. Pacira BioSciences's 3-year average revenue growth rate is better than 70.02% of 924 companies in the Drug Manufacturers industry. Its 3-year average EBITDA growth rate is 59.7%, which ranks better than 93.12% of 887 companies in the Drug Manufacturers industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can also evaluate a company's profitability. If the ROIC exceeds the WACC, the company is likely creating value for its shareholders. During the past 12 months, Pacira BioSciences's ROIC is 5.22 while its WACC came in at 5.71.
Conclusion
In conclusion, Pacira BioSciences (PCRX, Financial) appears to be significantly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 93.12% of 887 companies in the Drug Manufacturers industry. To learn more about Pacira BioSciences stock, you can check out its 30-Year Financials here.
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