ABAXIS, Inc. – Value Analysis (NASDAQ:ABAX) : October 6, 2017

Capitalcube gives ABAXIS, Inc. a score of 69.

Our analysis is based on comparing ABAXIS, Inc. with the following peers – Becton, Dickinson and Company, IDEXX Laboratories, Inc., Integra LifeSciences Holdings Corporation, West Pharmaceutical Services, Inc., ICU Medical, Inc., Thermo Fisher Scientific Inc., Abbott Laboratories, Heska Corporation and Johnson & Johnson (BDX-US, IDXX-US, IART-US, WST-US, ICUI-US, TMO-US, ABT-US, HSKA-US and JNJ-US).

Investment Outlook

ABAXIS, Inc. has a fundamental score of 69 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It’s current Price/Book of 3.88 is about median in its peer group.
  • We classify ABAX-US as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • ABAX-US has a successful operating model with relatively high net profit margins and asset turns.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • ABAX-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While ABAX-US‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • ABAX-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

ABAX-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 0.03% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 8.94%), and a well-cushioned interest coverage level of 811.65x, ABAX-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 9 peers for the company have an outstanding debt balance.

ABAX-US has maintained its Quick & Able profile from the recent year-end.

  • ABAX-US‘s interest coverage has declined 187.35 points from last year’s high but remains above its five-year average interest coverage of 674.70.
  • Though its interest coverage decreased to 811.65x from 999x (in 2017), its peer median remained relatively stable during this period at 16.81x.
  • Interest coverage fell 187.45 points relative to peers.
  • ABAX-US‘s debt-EV is its lowest relative to the last five years and compares to a high of 0.09% in 2014.
  • Though its debt-EV has remained relatively stable at 0.03% compared to 2017, its peer median has decreased to 8.94% from 9.98% during this period.
  • Relative to peers, debt-EV rose 1.03 percentage points.

Access the detailed analysis for ABAXIS, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Becton, Dickinson and Company 38.38 5.56 4.85 10.95
IDEXX Laboratories, Inc. 8.7 0.9 11.4 29.58
Integra LifeSciences Holdings Corporation 17.79 3.46 7.41 13.96
West Pharmaceutical Services, Inc. 3.28 2.48 22.23 131.59
ICU Medical, Inc. 2.3 4.78 101.25 75.65
Thermo Fisher Scientific Inc. 19.94 1.47 5.91 22.45
Abbott Laboratories 24.31 2.94 3.66 23.47
Heska Corporation 0.55 2.46 115.44 1043.82
Johnson & Johnson 9.17 1.34 27.52 61.86
Abaxis, Inc. 0.03 5.66 811.65 12064.84
Peer Median 8.94 2.71 16.81 45.72
Best In Class 0.03 5.66 811.65 12064.84

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Company Profile

ABAXIS, Inc. develops, manufactures and markets portable blood analysis systems. It operates through the following segments: Medical Market and Veterinary Market. The Medical Market segment serves a worldwide customer group consisting of military installations, physicians’ office practices across all specialties, urgent care, outpatient and walk-in clinics health screening operations, home care providers, nursing homes, ambulance companies, oncology treatment clinics, dialysis centers, pharmacies and hospital labs. The Veterinary Market segment serves a customer group consisting of companion animal hospitals, animal clinics with mixed practices of small animals, birds and reptiles, equine and bovine practitioners, veterinary emergency clinics, veterinary referral hospitals, universities, government, pharmaceutical companies, biotechnology companies and private research laboratories. The company was founded by Vladimir E. Ostoich in April 1989 and is headquartered in Union City, CA.

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