Long-established in the Drug Manufacturers industry, Pacira BioSciences Inc (PCRX, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 2.53%, juxtaposed with a three-month change of -18.91%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Pacira BioSciences Inc.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 6/10
- Growth rank: 6/10
- GF Value rank: 4/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned Pacira BioSciences Inc the GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding Pacira BioSciences Inc's Business
Pacira BioSciences Inc, with a market cap of $1.5 billion, is a provider of non-opioid pain management and regenerative health solutions dedicated to advancing and improving outcomes for healthcare practitioners and their patients. The company has launched 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 sales of $669.23 million and an operating margin of 10.21%, the company has a solid financial footing.
Financial Strength Breakdown
Pacira BioSciences Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 2.25 positions it worse than 84.23% of 685 companies in the Drug Manufacturers industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt.
The company's Altman Z-Score is just 1.86, which is below the safe threshold of 2.99. Although this does not imply immediate danger of financial distress, the stock may face some financial struggles if the Altman Z-score drops below 1.81.
Additionally, the company's low cash-to-debt ratio at 0.36 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 5.4, which is above Joel Tillinghast's warning level of 4 and is worse than 82.62% of 627 companies in the Drug Manufacturers industry. Tillinghast said in his book “Big Money Think's Small: Biases, Blind Spots, and Smarter Investing” that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Next Steps
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. It's crucial for investors to consider these factors when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
