Following a daily loss of -7.86% and a three-month loss of -29.64%, Lantheus Holdings Inc (LNTH, Financial) currently trades at a price of $61.58 per share. With an Earnings Per Share (EPS) (EPS) of 0.41, the question arises: is the stock modestly overvalued? This article seeks to answer this question by conducting a detailed valuation analysis. We invite you to read on to gain a deeper understanding of Lantheus Holdings Inc's intrinsic value.
A Snapshot of Lantheus Holdings Inc
Lantheus Holdings Inc is a key player in the United States healthcare sector, specializing in the development of diagnostic products. The company's products are categorized into Precision Diagnostics, Radiopharmaceutical Oncology, and Strategic Partnerships and Other Revenue. With a market cap of $4.20 billion and sales of $1.10 billion, Lantheus Holdings Inc's stock price currently stands at $61.58, while its GF Value is $50.78, indicating that the stock is modestly overvalued.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. If the stock price is significantly above the GF Value Line, it is 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. Given Lantheus Holdings Inc's current price of $61.58 per share and a market cap of $4.20 billion, the stock is estimated to be modestly overvalued. This suggests that the long-term return of its stock is likely to be lower than its business growth.
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Assessing Lantheus Holdings Inc's Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it is crucial to carefully review a company's financial strength before deciding to buy shares. Lantheus Holdings Inc has a cash-to-debt ratio of 0.7, which ranks worse than 55.15% of 1039 companies in the Drug Manufacturers industry. Based on this, GuruFocus ranks Lantheus Holdings Inc's financial strength as 6 out of 10, suggesting a fair balance sheet.
Evaluating Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Lantheus Holdings Inc has been profitable 5 over the past 10 years. Over the past twelve months, the company had a revenue of $1.10 billion and Earnings Per Share (EPS) of $0.41. Its operating margin is 2.57%, which ranks worse than 59.71% of 1035 companies in the Drug Manufacturers industry. Overall, the profitability of Lantheus Holdings is ranked 6 out of 10, which indicates fair profitability.
Growth is probably one of the most important factors in the valuation of a company. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Lantheus Holdings Inc's 3-year average revenue growth rate is better than 77.21% of 917 companies in the Drug Manufacturers industry. However, its 3-year average EBITDA growth rate is -5.8%, which ranks worse than 73.61% of 879 companies in the Drug Manufacturers industry.
ROIC vs WACC
Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (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, Lantheus Holdings Inc's ROIC was 6.36 while its WACC came in at 6.58.
Conclusion
Overall, Lantheus Holdings Inc's stock is estimated to be modestly overvalued. The company's financial condition is fair and its profitability is fair. Its growth ranks worse than 73.61% of 879 companies in the Drug Manufacturers industry. To learn more about Lantheus Holdings Inc 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.
