RadNet, Inc. – Value Analysis (NASDAQ:RDNT) : October 30, 2017

Capitalcube gives RadNet, Inc. a score of 41.

Our analysis is based on comparing RadNet, Inc. with the following peers – Digirad Corporation, Quest Diagnostics Incorporated, Laboratory Corporation of America Holdings, Enzo Biochem, Inc., Psychemedics Corporation, CombiMatrix Corporation, Intelligent Systems Corporation and Chicago Rivet & Machine Co. (DRAD-US, DGX-US, LH-US, ENZ-US, PMD-US, CBMX-US, INS-US and CVR-US).

Investment Outlook

RadNet, Inc. has a fundamental score of 41 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • It currently trades at a Price/Book ratio of (8.09).
  • RDNT-US outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • RDNT-US‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • RDNT-US‘s return on assets has improved from below median to about median among its peers over the last five years.
  • The company’s relatively low gross margin and median pre-tax margin suggest operations may be constrained on pricing versus peers.
  • While RDNT-US‘s revenues growth has been around the peer median in recent years, the market seems to see faster growth ahead and gives its shares a higher than peer median P/E ratio.
  • The company’s relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • RDNT-US seems too levered to raise additional debt.

Access our research and ratings on RadNet, Inc.

Leverage & Liquidity

RDNT-US would seem to have a hard time raising additional debt.

  • With debt at a relatively high 63.58% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 1.51%), and relatively tight interest coverage level of 1.22x, RDNT-US would have a hard time raising much additional debt. The company has a Constrained profile in terms of its ability to take on further debt.
  • Of the 8 chosen peers for the company, only 6 of the stocks have an outstanding debt balance. Companies with no debt include INS-US and CVR-US.

RDNT-US has maintained its Limited Flexibility profile from the recent year-end.

  • RDNT-US‘s interest coverage is similar to its five-year average interest coverage of 1.02x.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (1.22x) and the peer median (6.33x).
  • RDNT-US‘s debt-EV is less than (but within one standard deviation of) its five-year average debt-EV of 75.24%.
  • The decrease in its debt-EV to 63.58% from 69.27% (in 2016) was also accompanied by a decrease in its peer median during this period to 1.51% from 4.28%.
  • Relative to peers, debt-EV fell 2.93 percentage points. Unlike the peer median, it is also above the 25% leverage benchmark.

Access the detailed analysis for RadNet, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Digirad Corporation 20.29 1.31 0.98 46.22
Quest Diagnostics Incorporated 23.15 1.47 8.48 39.3
Laboratory Corporation of America Holdings 31.42 1.89 6.33 21.74
Enzo Biochem, Inc. 0.2 5 0 253.55
Psychemedics Corporation 1.51 2.72 0 632.93
CombiMatrix Corporation 0.95 3.84 -50.09 -605.19
Intelligent Systems Corporation 0 9.41 No interest exp 999
Chicago Rivet & Machine Co. 0 7.23 No interest exp 999
RadNet, Inc. 63.58 1.37 1.22 21.3
Peer Median 1.51 2.72 6.33 46.22
Best In Class 0.2 9.41 No interest exp 999

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Company Profile

RadNet, Inc. provides freestanding, fixed-site outpatient diagnostic imaging services in the United States. Its centers provide physicians with imaging capabilities to facilitate the diagnosis and treatment of diseases and disorders and reduce unnecessary invasive procedures. The company offers magnetic resonance imaging, computed tomography, positron emission tomography, nuclear medicine, mammography, ultrasound, diagnostic radiology, fluoroscopy, and other related procedures. RadNet was founded by Howard Berger in 1980 and is headquartered in Los Angeles, CA.


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