Long-established in the Medical Diagnostics & Research industry, OPKO Health Inc (OPK, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 5%, juxtaposed with a three-month change of -19.44%. However, fresh insights from the GF Score 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 OPKO Health Inc.
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.
- Financial strength rank: 5/10
- Profitability rank: 2/10
- Growth rank: 3/10
- GF Value rank: 3/10
- Momentum rank: 8/10
Based on the above method, GuruFocus assigned OPKO Health Inc the GF Score of 61 out of 100, which signals poor future outperformance potential.
OPKO Health Inc: A Snapshot of the Business
OPKO Health Inc is a diversified biotechnology company that operates pharmaceutical and diagnostic development programs. It has a development and commercial supply pharmaceutical company, as well as a global supply-chain operation and holding company in Ireland. OPKO also owns a specialty active pharmaceutical ingredients manufacturer in Israel. The company's bio-reference testing business consists of routine testing and esoteric testing. Routine tests measure various health parameters, such as the functions of the heart, kidney, liver, thyroid, and other organs.
Financial Strength Analysis
OPKO Health Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0, which positions it worse than 0% of 111 companies in the Medical Diagnostics & Research 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 0.05, 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 0.37 indicates a struggle in handling existing debt levels.
Profitability Analysis
OPKO Health Inc's low Profitability rank can also raise warning signals. OPKO Health Inc's Operating Margin has declined over the past five years ((-77,227.00%)), as shown by the following data: 2018: -16.79; 2019: -21.79; 2020: 3.74; 2021: -0.82; 2022: -24.51; .
Additionally, OPKO Health Inc's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 38.94; 2019: 36.53; 2020: 37.69; 2021: 32.77; 2022: 28.70; . This trend underscores the company's struggles to convert its revenue into profits.
With a Piotroski F-Score of 2, OPKO Health Inc'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, OPKO Health Inc might be facing challenges in these areas.
Growth Prospects
A lack of significant growth is another area where OPKO Health Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -2.7 per year over the past three years, which underperforms worse than 76.96% of 204 companies in the Medical Diagnostics & Research industry. Stagnating revenues may pose concerns in a fast-evolving market.
Lastly, OPKO Health Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While OPKO Health Inc has a history of strong performance, these metrics suggest that the company may face challenges in maintaining this trend. As such, investors should exercise caution and conduct further research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
