Is Bio-Techne Corp (TECH) Modestly Undervalued?
With a daily loss of -2.49%, a 3-month loss of -5.95%, and an Earnings Per Share (EPS) of 1.76, Bio-Techne Corp (NASDAQ:TECH) presents an interesting case for investors. But is the stock modestly undervalued? This article explores the valuation of Bio-Techne Corp (NASDAQ:TECH), providing you with a comprehensive analysis. Read on to discover more.
An Introduction to Bio-Techne Corp (NASDAQ:TECH)
Based in Minnesota, Bio-Techne is a life sciences manufacturer that supplies consumables and instruments for the pharma, biotech, academic, and diagnostic markets. The company reports revenue from two segments: protein sciences (75% of revenue), and diagnostics and genomics (25%). With operations in the United States, EMEA, the U.K., and APAC, Bio-Techne has a global presence. At its current price of $78.24 per share, Bio-Techne has a market cap of $12.30 billion, indicating that the stock may be modestly undervalued.
The GF Value of Bio-Techne Corp (NASDAQ:TECH)
The GF Value is a unique measure of the intrinsic value of a stock, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line represents the fair value at which the stock should ideally trade. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher. Given Bio-Techne's current price and market cap, the stock appears to be modestly undervalued.
Financial Strength of Bio-Techne Corp (NASDAQ:TECH)
Investing in companies with poor financial strength can lead to a higher risk of permanent loss of capital. Therefore, it's crucial to carefully review a company's financial strength before deciding to buy its stock. Bio-Techne has a cash-to-debt ratio of 0.45, which is worse than 86.45% of 1572 companies in the Biotechnology industry. However, GuruFocus ranks the overall financial strength of Bio-Techne at 8 out of 10, indicating that the financial strength of Bio-Techne is strong.
Profitability and Growth of Bio-Techne Corp (NASDAQ:TECH)
Investing in profitable companies carries less risk, especially in those that have demonstrated consistent profitability over the long term. Bio-Techne has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $1.10 billion and Earnings Per Share (EPS) of $1.76. Its operating margin of 26.3% is better than 92.32% of 1028 companies in the Biotechnology industry.
The growth of a company is one of the most important factors in its valuation. The average annual revenue growth of Bio-Techne is 14.4%, which ranks better than 60.39% of 765 companies in the Biotechnology industry. However, the 3-year average EBITDA growth is 1.5%, ranking worse than 55.42% of 1265 companies in the industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another way to evaluate its profitability. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Bio-Techne's ROIC was 11.75, while its WACC came in at 11.29.
Conclusion
Overall, the stock of Bio-Techne Corp (NASDAQ:TECH) appears to be modestly undervalued. The company's financial condition is strong, and its profitability is robust. However, its growth ranks worse than 55.42% of 1265 companies in the Biotechnology industry. To learn more about Bio-Techne stock, check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
