- By GF Value
The stock of Bio-Rad Laboratories (NYSE:BIO, 30-year Financials) appears to be significantly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $570.04 per share and the market cap of $17 billion, Bio-Rad Laboratories stock appears to be significantly overvalued. GF Value for Bio-Rad Laboratories is shown in the chart below.
Because Bio-Rad Laboratories is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which averaged 5.5% over the past three years and is estimated to grow 5.09% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Bio-Rad Laboratories has a cash-to-debt ratio of 4.39, which is in the middle range of the companies in the industry of Medical Devices & Instruments. The overall financial strength of Bio-Rad Laboratories is 8 out of 10, which indicates that the financial strength of Bio-Rad Laboratories is strong. This is the debt and cash of Bio-Rad Laboratories over the past years:
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a company with high profit margins offers better performance potential than a company with low profit margins. Bio-Rad Laboratories has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $2.5 billion and earnings of $126.32 a share. Its operating margin of 16.14% better than 78% of the companies in the industry of Medical Devices & Instruments. Overall, GuruFocus ranks Bio-Rad Laboratories's profitability as fair. This is the revenue and net income of Bio-Rad Laboratories over the past years: