Alphatec Holdings Inc (ATEC): A Deep Dive into Its Performance Potential
Long-established in the Medical Devices & Instruments industry, Alphatec Holdings Inc (NASDAQ:ATEC) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 3.8%, juxtaposed with a three-month change of -3.3%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Alphatec Holdings Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
1. Financial strength rank: 3/10
2. Profitability rank: 2/10
3. Growth rank: 3/10
4. GF Value rank: 6/10
5. Momentum rank: 3/10
Based on the above method, GuruFocus assigned Alphatec Holdings Inc the GF Score of 57 out of 100, which signals poor future outperformance potential.
Alphatec Holdings Inc: A Snapshot
Alphatec Holdings Inc is a medical technology company with a market cap of $1.76 billion. The company focuses on the design, development, and advancement of products for the surgical treatment of spinal disorders associated with disease and degeneration, congenital deformities, and trauma. Its spine approach technologies include Posterior Cervical Fusion, Anterior Cervical Discectomy and Fusion, Lateral Interbody Fusion, and Posterior Lumbar Interbody Fusion among others. However, with sales of $421.81 million and an operating margin of -32.46%, the company's financial health raises concerns.
Financial Strength Analysis
Alphatec Holdings Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 417 companies in the Medical Devices & Instruments industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just -0.46, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.21 indicates a struggle in handling existing debt levels.
Profitability Analysis
Alphatec Holdings Inc's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years ((-127,100.00%)), as shown by the following data: 2018: -21.81; 2019: -34.09; 2020: -31.82; 2021: -44.76; 2022: -34.52. Additionally, Alphatec Holdings Inc's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 68.97; 2019: 68.41; 2020: 70.76; 2021: 64.87; 2022: 66.42. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where Alphatec Holdings Inc seems to falter, as evidenced by the company's low Growth rank. Lastly, Alphatec Holdings Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given Alphatec Holdings Inc's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has a strong reputation in the Medical Devices & Instruments industry, its declining performance and financial health raise concerns about its future prospects. Therefore, investors should exercise caution when considering this stock.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
