Long-established in the Consumer Packaged Goods industry, Cyanotech Corp (CYAN, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 8.77%, juxtaposed with a three-month change of -27.03%. 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 Cyanotech Corp.
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: 4/10
- 2. Profitability rank: 3/10
- 3. Growth rank: 2/10
- 4. GF Value rank: 4/10
- 5. Momentum rank: 1/10
Based on the above method, GuruFocus assigned Cyanotech Corp the GF Score of 51 out of 100, which signals poor future outperformance potential.
Snapshot of Cyanotech Corp's Business
Cyanotech Corp is engaged in the production of natural products derived from microalgae for the nutritional supplements market. The company's products include BioAstin Hawaiian Astaxanthin and Hawaiian Spirulina Pacifica, dietary supplements used for extra energy, a strengthened immune system, cardiovascular benefits, and as a source of antioxidant carotenoids. BioAstin Hawaiian Astaxanthin is a dietary antioxidant shown to support and maintain the body's natural inflammatory response, enhance skin, and support eye and joint health. It derives maximum revenue from the Packaged product and geographically from the United States.
Financial Strength Breakdown
Cyanotech Corp's financial strength indicators present some concerning insights about the company's balance sheet health. Cyanotech Corp has an interest coverage ratio of 0, which positions it worse than 0% of 1358 companies in the Consumer Packaged Goods 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-Scoreis just -0.2, 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 0.06 indicates a struggle in handling existing debt levels.
Profitability Breakdown
Cyanotech Corp's low Profitability rank can also raise warning signals. Cyanotech Corp's Operating Margin has declined over the past five years ((-403.95%)), as shown by the following data: 2019: -9.92; 2020: 3.30; 2021: 0.26; 2022: 7.16; 2023: -12.60; .
Additionally, Cyanotech Corp's Gross Margin has also declined over the past five years, as evidenced by the data: 2019: 34.65; 2020: 39.81; 2021: 34.37; 2022: 37.72; 2023: 31.32; . This trend underscores the company's struggles to convert its revenue into profits.
With a Piotroski F-Score of 2, Cyanotech Corp's financial health appears concerning. This score, rooted in Joseph Piotroski's nine-point scale, evaluates a firm's profitability, liquidity, and operating efficiency. Given its rating, Cyanotech Corp might be facing challenges in these areas.
Growth Prospects
A lack of significant growth is another area where Cyanotech Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -11.5 per year over the past three years, which underperforms worse than 88.56% of 1713 companies in the Consumer Packaged Goods industry. Stagnating revenues may pose concerns in a fast-evolving market.
Lastly, Cyanotech Corp predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given Cyanotech Corp's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has a rich history in the Consumer Packaged Goods industry, its recent financial indicators suggest a challenging road ahead. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
