It's been a great afternoon session for Vaxcyte investors, who saw their shares rise 2.3% to a price of $54.22 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Vaxcyte's Valuation Is in Line With Its Sector Averages:
Vaxcyte, Inc., a clinical-stage biotechnology vaccine company, develops novel protein vaccines to prevent or treat bacterial infectious diseases. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 24.45 and an average price to book (P/B) ratio of 4.16. In contrast, Vaxcyte has a trailing 12 month P/E ratio of -15.4 and a P/B ratio of 4.63.
When we divide Vaxcyte's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -13.97. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
An Exceptionally Strong Balance Sheet:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (k) | $0 | $0 | $0 | $0 |
| Operating Margins | n/a | n/a | n/a | n/a |
| Net Margins | n/a | n/a | n/a | n/a |
| Net Income (k) | -$50,274 | -$89,217 | -$100,077 | -$223,485 |
| Net Interest Expense (k) | $592 | $237 | $337 | $8,354 |
| Depreciation & Amort. (k) | -$1,232 | -$1,405 | -$3,457 | -$9,196 |
| Earnings Per Share | -$1.96 | -$3.02 | -$1.93 | -$3.53 |
| EPS Growth | n/a | -54.08% | 36.09% | -82.9% |
| Diluted Shares (k) | 25,599 | 29,546 | 51,922 | 93,707 |
| Free Cash Flow (k) | -$48,340 | -$47,783 | -$127,948 | -$176,445 |
| Capital Expenditures | -$1,195 | -$1,155 | -$6,555 | -$5,848 |
| Net Current Assets (k) | -$110,348 | $342,021 | $216,029 | $889,990 |
| Current Ratio | 5.58 | 8.3 | 8.93 | 23.26 |
Vaxcyte has consistently negative margins with a stable trend, declining EPS growth, and negative and highly variable cash flows. On the other hand, the company benefits from an excellent current ratio and weak revenue growth and increasing reinvestment in the business.
