Now trading at a price of $208.41, Laboratory has moved 0.5% so far today.
Laboratory returned gains of 55.8% last year, with its stock price reaching a high of $263.13 and a low of $200.32. Over the same period, the stock underperformed the S&P 500 index by -1560.0%. As of April 2023, the company's 50-day average price was $224.46. Laboratory Corporation of America Holdings operates as a life sciences company that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions. Based in Burlington, NC, the large-cap Health Care company has 80,000 full time employees. Laboratory has offered a 1.4% dividend yield over the last 12 months.
Growing Revenues With Increasing Reinvestment in the Business:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $11,555 | $13,978 | $16,121 | $14,877 |
| Gross Margins | 28.2% | 35.4% | 34.9% | 29.5% |
| Operating Margins | 12.0% | 21.1% | 20.5% | 14.3% |
| Net Margins | 7.13% | 11.13% | 14.75% | 8.6% |
| Net Income (MM) | $824 | $1,556 | $2,377 | $1,279 |
| Net Interest Expense (MM) | -241 | -207 | -212 | -180 |
| Net Interest Expense (MM) | -$241 | -$207 | -$212 | -$180 |
| Depreciation & Amort. (MM) | -$577 | -$625 | -$745 | -$634 |
| Earnings Per Share | $8.35 | $15.88 | $24.39 | $11.19 |
| EPS Growth | n/a | 90.18% | 53.59% | -54.12% |
| Diluted Shares (MM) | 99 | 98 | 98 | 89 |
| Free Cash Flow (MM) | $1,044 | $1,754 | $2,649 | $1,474 |
| Capital Expenditures (MM) | -$400 | -$382 | -$460 | -$482 |
| Net Current Assets (MM) | -$7,473 | -$5,587 | -$4,782 | -$5,434 |
| Current Ratio | 1.13 | 1.66 | 1.92 | 1.5 |
| Long Term Debt (MM) | $5,790 | $5,419 | $5,416 | $5,039 |
| Net Debt / EBITDA | 3.16 | 1.53 | 1.01 | 2.13 |
Laboratory benefits from growing revenues and increasing reinvestment in the business, average operating margins with a stable trend, and positive EPS growth. The company's financial statements show consistent free cash flow and healthy leverage. However, the firm has slimmer gross margins than its peers. Finally, we note that Laboratory has just enough current assets to cover current liabilities.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Laboratory has a trailing twelve month P/E ratio of 20.1, compared to an average of 24.45 for the Health Care sector. Based on its EPS guidance of $18.6, the company has a forward P/E ratio of 12.1. According to the 17.4% compound average growth rate of Laboratory's historical and projected earnings per share, the company's PEG ratio is 1.15. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 9.9%. On this basis, the company's PEG ratio is 2.02. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Laboratory in terms of its equity because its P/B ratio is 1.79 while the sector average is 4.16. The company's shares are currently trading 5.2% above their Graham number.
Laboratory Has an Analyst Consensus of Strong Upside Potential:
The 13 analysts following Laboratory have set target prices ranging from $235.0 to $295.0 per share, for an average of $273.08 with a buy rating. As of April 2023, the company is trading -17.8% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Laboratory has an average amount of shares sold short because 2.5% of the company's shares are sold short. Institutions own 93.1% of the company's shares, and the insider ownership rate stands at 0.28%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 14% stake in the company is worth $2,492,546,918.
