Owens & Minor Inc (OMI, Financial) recently showcased a notable daily gain of 11.1%, despite a three-month loss of 5.44%, and reported a Loss Per Share of $0.51. These fluctuations prompt a deeper analysis into whether the stock is modestly undervalued, as suggested by its current market metrics compared to the GF Value. This article aims to explore the intrinsic valuation of Owens & Minor (OMI) to determine if the current market price truly reflects its fair value.
Company Overview
Owens & Minor Inc operates primarily under two segments: Products & Healthcare Services and Patient Direct. It manufactures and sources medical surgical products, and provides a range of healthcare solutions. The majority of its revenue, which totals $10.40 billion, is generated from the Products & Healthcare Services segment. With a current stock price of $20.79 and a GF Value of $25.39, Owens & Minor appears to be modestly undervalued. This valuation provides a pivot for a detailed examination of the company's financial health and market position.
Understanding GF Value
The GF Value is a proprietary measure calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. For Owens & Minor, the GF Value suggests the stock is currently traded below its fair value, indicating potential for higher future returns. This underpricing is an opportunity for investors looking for value buys in the healthcare distribution sector.
Financial Strength and Risks
Investing in companies like Owens & Minor requires an understanding of their financial resilience. The company's cash-to-debt ratio of 0.1 is lower than 87.63% of its peers in the Medical Distribution industry, suggesting higher financial risk. This is further supported by its fair financial strength rating of 5 out of 10 by GuruFocus.
Profitability and Growth Prospects
Owens & Minor has demonstrated profitability in 7 out of the past 10 years, with a recent operating margin of 3.02%. However, its growth metrics show potential concerns, with a 3-year average annual revenue growth of only 0.7%, ranking below many competitors. The company's Return on Invested Capital (ROIC) of 6.82 also does not favorably compare against its Weighted Average Cost of Capital (WACC) of 8.08, indicating it may not be creating sufficient value for shareholders.
Conclusion
While Owens & Minor (OMI, Financial) exhibits signs of being modestly undervalued based on its GF Value, potential investors should weigh its financial strength and growth prospects carefully. The company's current market position and financial health suggest cautious optimism for value investors. For a deeper insight into Owens & Minor's long-term financials, consider exploring its 30-Year Financials.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
