Lantheus shares fell by -3.4% during the day's afternoon session, and are now trading at a price of $75.53. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
a Very Low P/E Ratio but Priced Beyond Its Margin of Safety:
Lantheus Holdings, Inc. develops, manufactures, and commercializes diagnostic and therapeutic products that assist clinicians in the diagnosis and treatment of heart, cancer, and other diseases worldwide. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 30.21 and an average price to book (P/B) ratio of 4.08. In contrast, Lantheus has a trailing 12 month P/E ratio of 11.5 and a P/B ratio of 5.49.
When we divideLantheus's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.31, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
Strong Revenue Growth but Similar Gross Margins to the Industry Average of 57.74%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $343,374 | $347,337 | $339,410 | $425,208 | $935,061 | $1,296,429 |
| Gross Margins | 51% | 50% | 41% | 44% | 62% | 55% |
| Net Margins | 12% | 9% | -4% | -17% | 3% | 25% |
| Net Income (k) | $40,518 | $31,667 | -$13,473 | -$71,279 | $28,067 | $326,661 |
| Net Interest Expense (k) | $17,405 | $13,617 | $9,479 | $7,752 | $7,185 | $20,019 |
| Depreciation & Amort. (k) | $13,929 | $13,379 | $24,689 | $42,288 | $47,929 | $60,043 |
| Diluted Shares (k) | 39,501 | 40,113 | 54,134 | 67,486 | 70,671 | 70,239 |
| Earnings Per Share | $1.03 | $0.79 | -$0.25 | -$1.06 | $0.4 | $4.65 |
| Avg. Price | $16.17 | $22.58 | $13.99 | $23.52 | $50.82 | $75.53 |
| P/E Ratio | 15.25 | 27.88 | -55.96 | -22.19 | 123.95 | 15.77 |
| Free Cash Flow (k) | $41,061 | $58,323 | $16,396 | $53,916 | $263,434 | $258,705 |
| EV / EBITDA | 9.76 | 15.09 | 34.58 | -89.71 | 42.63 | 11.66 |
| Total Debt (k) | $266,459 | $204,213 | $239,101 | $186,405 | $558,420 | $562,493 |
| Net Debt / EBITDA | 1.95 | 1.71 | 7.78 | -4.74 | 1.7 | -0.36 |
| Current Ratio | 3.7 | 2.62 | 2.29 | 2.61 | 2.74 | 5.8 |
Lantheus has rapidly growing revenues and increasing reinvestment in the business and generally positive cash flows. Additionally, the company's financial statements display an excellent current ratio of 5.8 and healthy leverage levels. Furthermore, Lantheus has similar gross margins to its peers.
