Neogen Corp (NEOG, Financial) has recently experienced a notable uptick in its stock performance, with a 4.83% gain over the past week and an impressive 22.65% surge over the last three months. Currently, the stock is trading at $16.06, with a market capitalization of $3.48 billion. According to GuruFocus, the GF Value of Neogen is $19.86, suggesting that the stock is modestly undervalued. This valuation marks a shift from three months ago when it was considered significantly undervalued at a GF Value of $21.91.
Introduction to Neogen Corp
Neogen Corp, operating within the Medical Diagnostics & Research industry, is a key player in the development, manufacture, and marketing of products for food and animal safety. The company's offerings are crucial in detecting substances like pathogens, allergens, and drug residues in food and animal feed. Neogen's business is split into two main segments: food safety, which accounts for 70% of post-merger sales, and animal safety, making up 20% of sales. Geographically, Neogen's market presence spans across the United States, which represents 60% of its total revenue, with the remaining 40% coming from international markets including Canada, Europe, Asia, and Latin America.
Assessing Neogen's Profitability
Neogen's financial health is robust, with a Profitability Rank of 7/10, indicating strong profitability within its industry. The company's Operating Margin stands at 7.43%, which is higher than 66.51% of its peers. Additionally, Neogen's Return on Equity (ROE) and Return on Assets (ROA) are 0.05% and 0.03% respectively, positioning it above more than half of its industry counterparts. However, its Return on Invested Capital (ROIC) is -9.99%, which, despite being better than 44.93% of its competitors, indicates areas for potential improvement. Neogen has maintained profitability for 9 out of the last 10 years, underscoring its financial resilience.
Growth Trajectory of Neogen
Neogen's Growth Rank is 6/10, reflecting moderate growth prospects. The company has demonstrated a steady increase in revenue, with a 3-Year Revenue Growth Rate per Share of 3.30% and a 5-Year Rate of 4.10%, outperforming a significant portion of its industry peers. Looking ahead, Neogen's estimated revenue growth rate for the next three to five years is 5.62%, which, although modest, is better than 20.9% of companies in its sector.
Major Shareholders and Market Influence
Neogen's shareholder base is led by Baillie Gifford (Trades, Portfolio), holding 11,789,521 shares, which accounts for 5.44% of total shares. Following closely is Ron Baron (Trades, Portfolio) with 7,304,967 shares, representing 3.37% of the shares, and Jeremy Grantham (Trades, Portfolio) holding 1,067,875 shares, or 0.49%. The involvement of these prominent investors underscores confidence in Neogen's market strategy and future prospects.
Competitive Landscape
Neogen operates in a competitive landscape with key players such as Sotera Health Co (SHC, Financial), Guardant Health Inc (GH, Financial), and Twist Bioscience Corp (TWST, Financial), which have market caps of $3.51 billion, $3.6 billion, and $3.11 billion respectively. These companies, like Neogen, are significant contributors to the Medical Diagnostics & Research industry, each bringing unique strengths and innovations to the market.
Conclusion
In conclusion, Neogen Corp's recent stock performance and modest undervaluation present an interesting opportunity for investors. The company's solid profitability metrics, consistent growth, and strategic market positioning, combined with the backing of significant shareholders, make it a noteworthy contender in the diagnostics and food and animal safety sectors. As Neogen continues to navigate its competitive landscape, its financial health and growth trajectory will be critical in sustaining its market presence and delivering value to its shareholders.
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.
