Moderate Price-to-Earnings Ratio
Reasonable Price-to-Sales Ratio
Strong Gross Profit Margin
Solid Return on Equity
Low Debt Levels
Healthy Liquidity Ratios
🏥 Strong Market Position
🔬 Innovation and Expansion
📈 Positive Growth Outlook
🔄 Strategic Acquisitions and Partnerships
High Price-to-Cash-Flow Ratio
Elevated EV-to-EBITDA Ratio
Low Net Profit Margin
Moderate Operating Profit Margin
Moderate Cash Position
💰 Margin Pressures
⚠️ Regulatory Uncertainties
Labcorp demonstrates strong business quality with a leading market position and significant innovation efforts, though faces challenges with margin pressures. Their future prospects appear favorable with projected growth, strategic acquisitions, and a solid pipeline, albeit with regulatory uncertainties.
Analysis Date: February 6, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$227.54
Current Market Price: $225.27
IV/P Ratio: 1.01x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
1.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for LH
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (25.21)
P/B ratio ≤ 1.5 (2.34)
Current ratio ≥ 2.0 (1.44x)
Long-term debt < Net current assets (0.51x)
Margin of safety (1.0%)
LH does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The gross profit margin of 26.92% indicates that the company retains a significant amount of revenue after accounting for the cost of goods sold, reflecting efficient production and pricing strategies.
The return on equity of 9.27% suggests that the company is effective at generating profits from its equity base, an essential metric for assessing shareholder value.
The net profit margin of 5.73% indicates that a relatively small portion of revenue is converted into actual profit, which may limit the company's capacity to reinvest and grow.
With an operating profit margin of 8.50%, the company has room for improvement in its operational efficiency, which is vital for sustainable growth.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
9.27%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
0.78%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
27.24%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
4.73%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The debt-to-equity ratio of 0.24 and debt-to-assets ratio of 0.11 indicate that the company maintains low debt levels, suggesting a lower risk profile and more financial flexibility.
The current ratio of 1.44 and quick ratio of 1.30 demonstrate that the company has sufficient liquidity to cover its short-term obligations, indicating strong financial health.
The cash ratio of 0.46 suggests that while the company has some cash reserves, it might not have enough to cover all current liabilities, which could pose a liquidity risk in adverse conditions.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.24x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.44x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Labcorp has a market-leading position in diagnostics and biopharma laboratory services, evidenced by a revenue increase of 10% year-over-year and strong organic growth. They have successfully established themselves as a trusted partner to hospitals and health systems.
The company has made significant advancements in science, innovation, and technology, including the acquisition of Invitae's assets, which enhance their genetic testing capabilities. Their development of Plasma Detect, an innovative assay, illustrates their commitment to addressing unmet medical needs.
Despite strong revenue growth, enterprise margins were down 40 basis points, primarily due to the impact of Invitae's integration and other operational challenges such as weather and staffing issues.
Labcorp anticipates enterprise revenue growth of 6.7% to 8% for 2025, with an adjusted EPS growth rate of 10% at the midpoint. This reflects a strong pipeline of acquisitions and organic growth opportunities.
Labcorp's robust acquisition pipeline, with a focus on partnerships that meet financial criteria, positions them well for future growth. Their recent deals, including the acquisition of Lab Works and collaborations with health systems, enhance their service offerings.
Potential regulatory challenges with lab-developed tests (LDTs) and the impact of PAMA may pose risks to growth and operational flexibility.