Investors often grapple with the challenge of determining a stock's true value, particularly in volatile markets. For Lantheus Holdings Inc (LNTH, Financial), a recent dip of -5.42% in its daily performance and a modest 3-month gain of 3.58% juxtapose interestingly with its Earnings Per Share (EPS) (EPS) of $1.43. The pertinent question arises: Is Lantheus Holdings modestly undervalued? This valuation analysis aims to explore this query, inviting readers to delve into the financial intricacies of Lantheus Holdings.
Company Overview
Lantheus Holdings Inc operates within the United States healthcare sector, focusing on the development of diagnostic products. Delineated into three primary categories—Precision Diagnostics, Radiopharmaceutical Oncology, and Strategic Partnerships and Other Revenue—Lantheus Holdings provides healthcare professionals with tools to diagnose and manage diseases, particularly in cardiology and oncology. The Precision Diagnostic products aid in disease detection and monitoring, while the Radiopharmaceutical Oncology segment offers both diagnostic and therapeutic solutions for cancer. The Strategic Partnerships segment includes a licensing agreement with Bausch Health Companies, Inc. for RELISTOR and other initiatives aimed at facilitating precision medicine. The company's current stock price stands at $68.51, contrasting with the GF Value of $85.47, suggesting a potential undervaluation worth exploring.
Understanding the GF Value
The GF Value is a unique metric that represents a stock's intrinsic value, as estimated by GuruFocus. It draws upon historical trading multiples, an adjustment factor based on the company's past performance and growth, and future business performance projections. According to the GF Value, Lantheus Holdings (LNTH, Financial) appears modestly undervalued with a market cap of $4.70 billion. This suggests that the stock's long-term return could surpass its business growth, as it's currently trading below what is considered its fair value.
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Financial Strength Assessment
Before investing, evaluating a company's financial strength is crucial. Lantheus Holdings' cash-to-debt ratio stands at 1, surpassing 50.38% of its peers in the Drug Manufacturers industry. With a financial strength rating of 7 out of 10, Lantheus Holdings demonstrates a fair level of financial robustness.
Profitability and Growth Insights
Investing in profitable companies, especially those with a consistent track record, typically poses less risk. Lantheus Holdings has maintained profitability for 5 out of the past 10 years, with a revenue of $1.20 billion and an EPS of $1.43 over the past twelve months. However, its operating margin of 4.6% ranks below 54% of its industry counterparts. The company's profitability rank is 6 out of 10, reflecting fair profitability.
Growth is a pivotal factor in a company's valuation. Lantheus Holdings' 3-year average revenue growth rate outperforms 77.43% of the companies in its industry. Yet, its 3-year average EBITDA growth rate of -5.8% lags behind 73.83% of its peers, indicating areas for potential improvement.
ROIC vs. WACC Comparison
An essential aspect of profitability analysis is the comparison of Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC). Ideally, a company's ROIC should exceed its WACC, indicating efficient capital use. Lantheus Holdings' ROIC over the past 12 months is 7.64, with a cost of capital at 4.97, showcasing its effective cash flow generation relative to capital investment.
Conclusion
In conclusion, Lantheus Holdings (LNTH, Financial) is currently positioned as modestly undervalued. The company exhibits fair financial health and profitability, although its growth falls short when compared to industry averages. Investors seeking more information on Lantheus Holdings can review 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.
