Orgenesis Inc (ORGS): A Deep Dive into Its Performance Potential
Long-established in the Biotechnology industry, Orgenesis Inc (NASDAQ:ORGS) has enjoyed a stellar reputation. It has recently witnessed a surge of 12.2%, juxtaposed with a three-month change of -65.57%. However, 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 Orgenesis 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: 3/10
3. Growth rank: 6/10
4. GF Value rank: 2/10
5. Momentum rank: 2/10
Based on the above method, GuruFocus assigned Orgenesis Inc the GF Score of 55 out of 100, which signals poor future outperformance potential.
Orgenesis Inc: A Snapshot
Orgenesis Inc is a biotech company working to unlock the potential of cell and gene therapies. It is focused on autologous therapies, with processes and systems that are developed for each therapy using a closed and automated processing system approach that is validated for compliant production near the patient for treatment of the patient at the point of care (POCare). The Company's business includes two reporting segments: Morgenesis and Therapies. With a market cap of $13.1 million and sales of $35.63 million, the company has an operating margin of -16.65%.
Financial Strength Analysis
Orgenesis 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 381 companies in the Biotechnology industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just -2.97, 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 0.01 indicates a struggle in handling existing debt levels.
Profitability Analysis
Orgenesis Inc's low Profitability rank can also raise warning signals. Additionally, Orgenesis Inc's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 41.98; 2019: -231.83; 2020: -306.42; 2021: 18.63; 2022: 41.55. This trend underscores the company's struggles to convert its revenue into profits.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Orgenesis Inc has made significant strides in the biotech industry, these metrics suggest that it may face challenges in maintaining its growth trajectory. Therefore, investors should exercise caution and conduct further research before making investment decisions.
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.
