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TheStreet Open House
Thoratec Corp
THOR : NASDAQ : Health Care
$25.70 | %
Today's Range: 25.27 - 25.87
Avg. Daily Volume: 1,135,200
10/17/14 - 3:59 PM ET

Financial Analysis


THORATEC CORP's gross profit margin for the second quarter of its fiscal year 2014 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. THORATEC CORP is extremely liquid. Currently, the Quick Ratio is 5.38 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 4.21% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q2 FY14 Q2 FY13
Net Sales ($mil)118.06130.48
EBITDA ($mil)29.5839.07
EBIT ($mil)25.5334.39
Net Income ($mil)17.4123.19


Balance Sheet Q2 FY14 Q2 FY13
Cash & Equiv. ($mil)291.2260.7
Total Assets ($mil)786.25732.88
Total Debt ($mil)0.00.0
Equity ($mil)677.24649.85


Profitability Q2 FY14 Q2 FY13
Gross Profit Margin74.3772.16
EBITDA Margin25.0529.94
Operating Margin21.6326.36
Sales Turnover0.630.67
Return on Assets8.66.98
Return on Equity9.987.88
Debt Q2 FY14 Q2 FY13
Current Ratio6.677.44
Debt/Capital0.00.0
Interest Expense0.00.0
Interest Coverage12766.50.0


Share Data Q2 FY14 Q2 FY13
Shares outstanding (mil)56.3357.51
Div / share0.00.0
EPS0.30.4
Book value / share12.0211.3
Institutional Own % n/a n/a
Avg Daily Volume1126042.0515638.0

Valuation


HOLD. The current P/E ratio indicates a discount compared to an average of 28.90 for the Health Care Equipment & Supplies industry and a premium compared to the S&P 500 average of 18.06. To use another comparison, its price-to-book ratio of 2.12 indicates a discount versus the S&P 500 average of 2.49 and a significant discount versus the industry average of 4.01. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, THORATEC CORP proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
THOR 21.79 Peers 28.90   THOR 12.58 Peers 20.83

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

THOR is trading at a discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

THOR is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
THOR 17.22 Peers 19.06   THOR 3.44 Peers 0.88

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

THOR is trading at a valuation on par with its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

THOR trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
THOR 2.12 Peers 4.01   THOR 34.48 Peers 53.00

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

THOR is trading at a significant discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, THOR is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
THOR 2.88 Peers 3.83   THOR 0.79 Peers 5.90

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

THOR is trading at a discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

THOR significantly trails its peers on the basis of sales growth

 

 

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