With a recent daily loss of -7.57%, a three-month loss of -34.95%, and an Earnings Per Share (EPS) (EPS) of 1.76, Bio-Techne Corp (TECH, Financial) seems to be significantly undervalued. This article aims to delve into the intrinsic value of the company and determine if the current stock price is a reflection of its true worth. Read on to discover our comprehensive valuation analysis of Bio-Techne.
Company Snapshot: Bio-Techne Corp (TECH, Financial)
Headquartered in Minnesota, Bio-Techne is a leading life sciences manufacturer supplying consumables and instruments for the pharma, biotech, academic, and diagnostic markets. The company operates in two segments, protein sciences (75% of revenue), and diagnostics and genomics (25%). The protein-focused segment manufactures equipment and associated consumables for protein characterization and analysis, and sells antibodies for research and clinical purposes. Bio-Techne's diagnostics segment provides controls and calibrators for diagnostic manufacturers and has a portfolio of diagnostic oncology assays.
The company has a strong presence in the United States, accounting for about 55% of its revenue. It also operates in EMEA (20% of sales), the U.K. (5%), and APAC (15%), with the rest of the world accounting for the remaining 5%.
With a current stock price of $55.03, Bio-Techne has a market cap of $8.70 billion, suggesting that the stock could be significantly undervalued. The company's income breakdown is as follows:
The GuruFocus Value (GF Value) of Bio-Techne
The GF Value is a proprietary measure that determines a stock's intrinsic value. It takes into account historical trading multiples, an adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line represents the fair value at which the stock should be traded.
According to our valuation method, Bio-Techne (TECH, Financial) appears to be significantly undervalued. The GF Value estimates that the stock's fair value is based on three key factors: historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. If the stock's share price is significantly above the GF Value Line, the stock may be overvalued, and its future returns may be poor. Conversely, if the stock's share price is significantly below the GF Value Line, the stock may be undervalued, and its future returns may be high.
Given that Bio-Techne is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength of Bio-Techne
Before investing in a company, it is crucial to evaluate its financial strength. Companies with poor financial strength pose a higher risk of permanent loss. The cash-to-debt ratio and interest coverage are excellent indicators of a company's financial strength. Bio-Techne has a cash-to-debt ratio of 0.45, which is lower than 86.16% of the 1532 companies in the Biotechnology industry. However, the overall financial strength of Bio-Techne is 8 out of 10, indicating that it is financially robust.
This is the debt and cash of Bio-Techne over the past years:
Profitability and Growth of Bio-Techne
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Bio-Techne has been profitable for ten years over the past decade. During the past 12 months, the company had revenues of $1.10 billion and an EPS of $1.76. Its operating margin of 25.6% is better than 91.31% of the 1047 companies in the Biotechnology industry. Overall, GuruFocus ranks Bio-Techne's profitability as strong.
Growth is probably the most crucial factor in a company's valuation. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Bio-Techne is 14.4%, which ranks better than 60.03% of 763 companies in the Biotechnology industry. The 3-year average EBITDA growth rate is 5.6%, which ranks better than 50.24% of 1260 companies in the Biotechnology industry.
ROIC vs WACC Comparison
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the ROIC exceeds the WACC, the company is likely creating value for its shareholders. During the past 12 months, Bio-Techne's ROIC is 11.44 while its WACC came in at 12.43.
The historical ROIC vs WACC comparison of Bio-Techne is shown below:
Conclusion
In summary, Bio-Techne Corp (TECH, Financial) appears to be significantly undervalued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 50.24% of 1260 companies in the Biotechnology industry. To learn more about Bio-Techne stock, you can check out its 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.
