Stock in Focus: Neogen Corporation (NEOG)

Company Profile:

Neogen Corporation, together with its subsidiaries, develops, manufactures, and markets various products for food and animal safety worldwide. It operates through two segments, Food Safety and Animal Safety. The Food Safety segment offers diagnostic test kits and related products to detect dangerous and unintended substances in food and animal feed, including foodborne pathogens, spoilage organisms, natural toxins, food allergens, genetic modifications, ruminant by-products, meat speciation, drug residues, pesticide residues, and general sanitation concerns; and AccuPoint Advanced rapid sanitation test to detect the presence of adenosine triphosphate, a chemical found in living cells. This segment offers its products primarily to food and feed producers and processors; grain producers and processors; producers of cookies, crackers, candy, ice cream, and other processed foods; meat and poultry processors, seafood processors, fruit and vegetable producers, and dairies; laboratories; and producers of pharmaceuticals, cosmetics, and veterinary vaccines. The Animal Safety segment provides veterinary instruments, pharmaceuticals, vaccines, topicals, parasiticides, diagnostic products, rodenticides, cleaners, disinfectants, insecticides, and genomics testing services for the animal safety market. This segment offers various products for researchers to detect biologically active substances. Its drug detection immunoassay test kits are used for the detection of abused and therapeutic drugs in farm and racing animals; detection of drug residues in meat and meat products; and human forensic toxicology drug screening applications. In addition, this segment’s products are used to maintain sanitary conditions and limit the potential hazards of bacteria, fungi, and viruses. Neogen Corporation was incorporated in 1981 and is headquartered in Lansing, Michigan.

Recent News:

Analysts have just delivered a major upgrade to their near-term forecasts. The current consensus from Neogen’s dual analysts is for revenues of US$703m in 2023 which – if met – would reflect a major 33% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing US$563m of revenue in 2023.

The company reported revenues for the fourth quarter increased 10% to $140,093,000, compared to $127,425,000 in the prior year, and revenues for the full fiscal year were $527,159,000, compared to the prior year’s $468,459,000, an increase of 13%.

 

Fundamental Analysis:

Ninestocks analyzes several different financial aspects:

Price to Book Value – P/BV, a ratio used to compare book value to its current market price, to gauge whether a stock is valued properly.

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Price to Earnings – PE, the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS).

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Discounted cash flow – DCF, a valuation method used to estimate the value of an investment based on its expected future cash flows.

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Return on Assets – ROA, indicates how profitable a company is in relation to its total assets, how efficiently uses assets to generate a profit.

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Return on Equity – ROE, a measure of financial performance calculated by dividing net income by equity. a gauge of profitability and efficiency.

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Debt to Equity – evaluate financial leverage, reflects the ability of equity to cover outstanding debts in the event of a business downturn.

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Conclusion:

NEOG receives outperform rating in price to book value, price to earnings and discounted cash flow. Technical indicators signal the bullish signs, as there is a bullish crossover in the MACD and Stochastic oscillator. The RSI(14) stands at 44 with positive bias. We rate Neogen Corporation (NEOG) a BUY.

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