With a daily loss of 4.12%, a 3-month loss of 15.44%, and a Loss Per Share of 1.49, 10x Genomics Inc (TXG, Financial) appears to be significantly undervalued. This article aims to provide a comprehensive analysis of the company's valuation, financial strength, profitability, and growth prospects. Read on to discover whether 10x Genomics is truly a hidden bargain in the stock market.
Company Overview
10x Genomics Inc is a life science technology company based in the United States. It offers a range of solutions, including instruments, consumables, and software for analyzing biological systems. The company's product portfolio includes Chromium Controller, Reagent Kits, 10x Compatible Products, and Informatics Software. The majority of its revenue is generated from consumables. As of September 18, 2023, the company's stock price stands at $47.68 per share, with a market cap of $5.60 billion. Compared to the GF Value of $99.21, the stock appears to be significantly undervalued.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the stock's ideal fair trading value. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
10x Genomics (TXG, Financial) appears to be significantly undervalued based on the GF Value calculation. At its current price of $47.68 per share, the stock's long-term return is likely to be much higher than its business growth.
Financial Strength
Investing in companies with poor financial strength poses a higher risk of permanent loss of capital. Therefore, it's crucial to review a company's financial strength before deciding to buy its stock. Looking at the cash-to-debt ratio and interest coverage is a great starting point. 10x Genomics has a cash-to-debt ratio of 3.93, which ranks better than 71.56% of 654 companies in the Healthcare Providers & Services industry. Overall, the financial strength of 10x Genomics is strong, with a GuruFocus rank of 8 out of 10.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, poses less risk. However, 10x Genomics has been profitable 0 over the past 10 years. Over the past twelve months, the company had a revenue of $568.40 million and a Loss Per Share of $1.49. Its operating margin is -31.39%, ranking worse than 80.06% of 652 companies in the Healthcare Providers & Services industry. Overall, the profitability of 10x Genomics is poor, with a GuruFocus rank of 3 out of 10.
Growth is a crucial factor in a company's valuation. A faster-growing company creates more value for shareholders, especially if the growth is profitable. However, the 3-year average annual revenue growth of 10x Genomics is -10.3%, ranking worse than 88.66% of 573 companies in the Healthcare Providers & Services industry. The 3-year average EBITDA growth rate is -28.3%, ranking worse than 89.1% of 523 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can provide insights into its profitability. If the ROIC exceeds the WACC, the company is likely creating value for its shareholders. Over the past 12 months, 10x Genomics's ROIC was -37.34, while its WACC was 14.15.
Conclusion
In conclusion, the stock of 10x Genomics (TXG, Financial) appears to be significantly undervalued. The company's financial condition is strong, but its profitability is poor. Its growth ranks worse than 89.1% of 523 companies in the Healthcare Providers & Services industry. To learn more about 10x Genomics stock, you can check out its 30-Year Financials here.
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