Amidst a significant daily loss of 26.88% and a three-month decline of 12.9%, Lantheus Holdings Inc (LNTH, Financial) presents a curious case for investors. With an Earnings Per Share (EPS) of $1.43, the question arises: is Lantheus Holdings significantly undervalued? This valuation analysis seeks to answer that by delving into the company's financials and market position. Read on to uncover whether Lantheus Holdings stands as a hidden gem in the healthcare sector.
Company Introduction
Lantheus Holdings Inc caters to the vital healthcare sector in the United States, specializing in the development of diagnostic products across three main categories: Precision Diagnostics, Radiopharmaceutical Oncology, and Strategic Partnerships and Other Revenue. With a focus on cardiology, the Precision Diagnostic products aid healthcare professionals in disease detection and monitoring. The Radiopharmaceutical Oncology segment provides tools to Find, Fight, and Follow cancer. Strategic Partnerships aim to enable precision medicine through biomarkers, digital solutions, and pharma services platforms, including the licensing of RELISTOR to Bausch Health Companies, Inc. A glance at the stock price juxtaposed with the GF Value suggests a potential undervaluation, setting the stage for a deeper investigation into Lantheus Holdings' intrinsic value.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated by considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. This calculation suggests that Lantheus Holdings (LNTH, Financial) is significantly undervalued. The stock's current price of $55.6 per share, against a market cap of $3.80 billion, further reinforces this assessment. This undervaluation implies a potential for higher long-term returns, surpassing the company's business growth rate.
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Financial Strength
Investing in companies with robust financial strength is crucial to avoid potential capital loss. Lantheus Holdings boasts a cash-to-debt ratio of 1, ranking it above half of its industry peers. This favorable ratio has earned the company a financial strength rating of 7 out of 10 from GuruFocus, indicating a sound balance sheet.
Profitability and Growth
Consistent profitability is a key indicator of reduced investment risk. Lantheus Holdings has maintained profitability for 5 out of the past 10 years, with a revenue of $1.20 billion and an Earnings Per Share (EPS) of $1.43 over the past twelve months. However, its operating margin of 4.6% is not as competitive, ranking lower than half of its industry counterparts. The company's overall profitability score is 6 out of 10, which is fair but leaves room for improvement.
Regarding growth, Lantheus Holdings' 3-year average annual revenue growth of 15.2% outperforms a majority of its industry, whereas its EBITDA growth rate is less impressive. This mixed growth performance suggests a need for careful consideration by investors.
ROIC vs WACC
The comparison between a company's Return on Invested Capital (ROIC) and its Weighted Average Cost of Capital (WACC) is a critical measure of profitability. Lantheus Holdings' ROIC of 7.64% surpasses its WACC of 4.75%, indicating value creation for shareholders. This positive spread is a promising sign for potential investors.
Conclusion
In summary, Lantheus Holdings (LNTH, Financial) appears to be significantly undervalued. The company's financials are stable, and its profitability is reasonable, though growth could be stronger. For those interested in a more detailed financial overview, Lantheus Holdings' 30-Year Financials are available for review.
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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.
