Bio-Reference
Laboratories, Inc. (BRLI) provides clinical laboratory testing services.
Key
Information:
Fundamental:
Sector:
Healthcare
Industry:
Medical Laboratories & Research
Liquidity:
Market
Capitalization: $242 Million
Average daily
volume (3-month): 97 Thousand Shares
Closing Stock
Price: $18.60
Risk
Proxies:
52-week high /
52-week low: 1.43
Beta
(3-month): 2.02
Debt/Equity:
0.373
Profitable:
Yes
Valuation:
Price/Sales:
1.42
Price/Book:
4.65
Price/Earnings:
31.21
Price/2006
Analyst Earnings Estimates: 18.06
Fundamental
Analysis
Overview
Based on our
analysis of investment returns, long-term growth, recent growth, growth
projections, stock ownership, and valuations, we believe Bio-Reference
Laboratories, Inc. is undervalued.
Returns
Bio-Reference
Laboratories, Inc. boasts strong 5-year return values; ROE has averaged 18.3%,
ROA has averaged 9.8%, and ROC has averaged 16.9%; these numbers are well above
both the industry averages and the S&P 500 averages.
The
exceptional investment return values that the company has produced over the
past five years reflect positively on management effectiveness, the business
plan, and the stock.
Long-Term
Growth
Revenues have
grown at an annualized 18.05% during the past five years; during the same
period of time, net income has grown at an annualized 55.95%. Revenues
have increased during every one of the past ten years.
The strong
long-term revenue and earning growth numbers are a positive for the stock.
Recent Growth
Revenues for
Q1 2006 came in 16.6% above revenues for Q1 2005. EPS for Q1 2006 was
$0.09, up from $0.07 in Q1 2005.
The relatively
good revenue and EPS growth are a positive signal for the stock.
Institutional
Transactions
Recent
institutional transactions have been slightly positive. 1,338,951 shares
were recently bought by institutions; 698,165 shares were recently sold.
Shares Sold
Short
849 thousand
shares shares were sold short as of the 10th of March. If the
stock breaks out to new highs, it may prompt short-sellers to cover their
positions. If this happens, the rise could be quite sharp; the average
daily volume of the stock is 97 thousand shares; hence, to cover all the
outstanding shares would require more than 8 days of average volume.
Analyst
Forecasts
Analysts
forecast 2006 EPS of $0.82, and 2007 EPS of $1.03. The spread of these
estimates are $0.06 and $0.05, respectively. Forecasts are for 35.3%
annual EPS growth over the next five years. During the MRQ, EPS met
consensus estimates. One analyst rates the stock as a Strong Buy, two
rate it as a Buy, and one rates it as a Hold.
We view the
relatively tight analyst estimate spread, strong long-term growth estimates,
and positive ratings as bullish indicators for the stock.
Comparative
Valuations
BRLI trades
with a much lower P/EG ratio than the industry average; it's P/EG ratio is .60;
the industry average P/EG ratio is 1.39.
The current
P/E ratio is higher than the industry average; it is 31.21 for BRLI, and 21.77
for the industry. However, there is good visibility for the next two
years, and the forward P/E ratio for BRLI is only 18.05, which is roughly in
line with the industry average forward P/EG ratio.
BRLI appears
undervalued when compared to valuations on other stocks in the same industry.
Valuations
BRLI trades with a low relative and absolute forward P/EG
ratio. In consideration of the company's consistent historic growth
rates, and high investment returns, we believe the current valuation
undervalues BRLI. We believe a P/EG ratio nearer to one would be more
appropriate.
Technical
Analysis
Our technical
analysis indicators are neutral for BRLI.
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Key
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Market
We are
fundamentally bullish on the stock
Target:
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