Harvard Bioscience, Inc. :HBIO-US: Earnings Analysis: 2016 By the Numbers : March 21, 2017

Harvard Bioscience, Inc. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of Harvard Bioscience, Inc. – PerkinElmer, Inc., Bruker Corporation, Agilent Technologies, Inc., Thermo Fisher Scientific Inc., Johnson & Johnson, Becton, Dickinson and Company, Danaher Corporation, General Electric Company and Bio-Rad Laboratories, Inc. Class A (PKI-US, BRKR-US, A-US, TMO-US, JNJ-US, BDX-US, DHR-US, GE-US and BIO-US) that have also reported for this period.


  • Gross margins widened from 42.22% to 43.72% compared to the same period last year, operating (EBITDA) margins now 3.00% from 3.35%.
  • Year-on-year change in operating cash flow of 663.55% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 104.52 108.66 108.66 105.17 111.17
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -4.31 -19.04 2.36 0.72 1.53
Earnings Growth (YOY) 77.38 -908.45 225.73 -52.81 -59.81
Net Margin -4.12 -17.52 2.17 0.69 1.38
EPS -0.13 -0.57 0.07 -0.06 0.08
Return on Equity -5.75 -22 2.48 0.73 1.53
Return on Assets -3.78 -14.87 1.74 0.54 1.18

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Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 42.22% to 43.72%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

HBIO-US‘s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days have declined to 108.27 days from 115.19 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

HBIO-US‘s change in operating cash flow of 663.55% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s operating (EBIT) margins contracted from -0.85% to -1.09%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from -3.32% to -2.94%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Harvard Bioscience, Inc. develops, manufactures, and markets broad range of specialized products, primarily apparatus and scientific instruments. The company operates through the following segment: Life Science Research Tools. The Life Science Research Tools segment is engaged in the development, manufacture and marketing of specialized products, primarily apparatus and scientific instruments, used to advance life science research at pharmaceutical and biotechnology companies, universities and government laboratories worldwide. The company’s molecular biology products consist of molecular biology spectrophotometers, DNA/RNA/protein calculators, multi-well plate readers, amino acid analysis systems, liquid dispensers, and gel electrophoresis systems, as well as liquid handling consumables primarily pipettes, pipette tips, autoradiography films, gloves, thermal cycler accessories, and reagents. It also distributes various devices, instruments, and consumable items used in experiments involving cells, tissues, organs, and animals in the fields of proteomics, physiology, pharmacology, neuroscience, cell biology, molecular biology, and toxicology. The company sells its products through catalog, Website, distributors, and direct sales force. Harvard Bioscience was founded by Dr. William T. Porter in 1901 and is headquartered in Holliston, MA.

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