Fonar (FONR) in Perspective

Fonar logged a 0.2% change during today's afternoon session, and is now trading at a price of $17.03 per share. In contrast, the S&P 500 index moved 1.9% and the Nasdaq posted a 2.5% change.

Over the last 52 weeks, the stock moved 16.6%, with a high of $19.32 and a low of $13.28. During this time, the stock underperformed the S&P 500 index by 37.4%. FONAR Corporation, together with its subsidiaries, engages in the research, development, production, and marketing of magnetic resonance imaging (MRI) scanners for the detection and diagnosis of human diseases in the United States. The small-cap Healthcare company has 484 full time employees and is based in Melville, NY. Fonar has not offered any dividends in the last year.

Low Levels of Debt Steadily Increasing Revenues:

2019-06-30 2020-06-30 2021-06-30 2022-06-30
Revenue (MM) $87 $86 $90 $98
Revenue Growth n/a -1.7% 5.0% 8.5%
Gross Margins 49.55% 49.47% 48.34% 48.17%
Gross Margins Growth n/a -0.16% -2.28% -0.35%
Operating Margins 25.39% 15.93% 19.01% 22.55%
Operating Margins Growth n/a -37.26% 19.33% 18.62%
Free Cash Flow (MM) $16 $13 $14 $11
FCF Growth n/a -20.06% 11.8% -25.23%
Capital Expenditures (MM) $-3 $-8 $-5 $-5
Net Debt / EBITDA -0.52 -1.69 -1.72 -1.42

We calculate net debt by adding short term debt and long term debt, and then subtracting cash and cash equivalents. Since the Net Debt / EBITDA level is negative, and the company has positive net margins, we conclude that the company's current assets are greater than the sum of its short term and long term debt.

The Market Is Fairly Valuing Fonar:

Compared to the Healthcare sector's average of 13.21, Fonar has a trailing twelve month price to earnings (P/E) ratio of 11.4. Furthermore, Fonar is undervalued in terms of its assets because its price to book (P/B) ratio is 0.7 compared to its sector average of 4.07. As of the date of publication, the company is trading -38.4% below its Graham number, implying there is a margin of safety for the stock. We calculate the Graham number as follows:

√(22.5 * TTM earnings per share * book value per share) = √(22.5 * 1.49 * 22.812) = $27.65

Fonar Is the Subject of Mixed Market Indicators:

The company has a very low short interest since 0.4% of the company's shares are tied to short positions. Institutions own 45.7% of Fonar's shares, while the insider ownership rate stands at 3.51%. The biggest shareholder is Kayne Anderson Rudnick Investment Management LLC with a 11% stake in the company worth approximately $11,985,697.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.