Liabilities Breakdown
447.2 M
Tax Liabilities
Current Liabilities
1.6 B
Long-Term Liabilities
| Total Liabilities | 1.76 Billion | |
| Current Liabilities | 180.5 Million | |
| Long-Term Liabilities | 1.58 Billion | |
| Tax Liabilities | 447.15 Million |
Chances of Neogen (USA Stocks:NEOG) to drop in February
 | By Gabriel Shpitalnik | Macroaxis Story |
As we approach February, investors should keep an eye on Neogen Corporation (NASDAQ: NEOG), a key player in the Diagnostics & Research industry within the Healthcare sector. Despite a loss of $22.9M applicable to common shares in the last fiscal year ending in May, the company's robust total revenue of $822.4M and gross profit of $406M indicate a strong financial foundation. However, potential dips in Neogen's performance could offer attractive entry points for investors. With a possible downside price of $16.45 and an upside of $20.72, the stock presents a compelling risk-reward proposition. The company's net invested capital stands at $3.1B, demonstrating its significant leverage in the market. Neogen is set to announce its earnings today, with the subsequent financial report anticipated on April 4, 2024. Currently, Neogen's Invested Capital is projected to experience a significant increase in the coming years. The company's current average Invested Capital is estimated to rise to approximately 1.5 billion, while its Revenue Per Employee is expected to decrease to roughly $256.6K. While some millennials may be indifferent towards the healthcare equipment and supplies sector, it's worth focusing on Neogen as a unique investment opportunity. We will further analyze whether this could be a more prosperous year for Neogen shareholders.
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Reviewed by Vlad Skutelnik
Neogen Corporation (NEOG) has shown a coefficient of variation of 1.3K, indicating a higher level of risk relative to the potential return on investment. However, the company's Jensen Alpha of 0.1933 suggests that it has been generating a reasonable return given the risk it has taken on. Despite a recent price percent change of -0.46, the company's strong cash position, with total cash from operating activities at $41M, provides a solid foundation for future growth. Therefore, any potential dips in Neogen's performance in February could offer attractive entry points for investors seeking to leverage the company's robust financial health.
Main Takeaways
The company currently holds $900 million in liabilities, with a Debt to Equity (D/E) ratio of 0.0. This may suggest that Neogen is not leveraging borrowing to its advantage. The firm has a current ratio of 8.89, indicating that it is sufficiently liquid and capable of meeting its financial obligations when they are due. While debt can be beneficial for Neogen until it encounters difficulties in repayment, either through new capital or free cash flow, there is a risk that shareholders could end up with nothing if the company fails to meet its legal debt repayment obligations. However, a more common scenario is when companies like Neogen issue additional shares at discounted prices, thereby diluting the value for existing shareholders. In such cases, debt can be an excellent tool for Neogen to invest in growth at high rates of return. When evaluating Neogen's use of debt, it is important to consider it in conjunction with cash and equity.Neogen financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Neogen, including all of Neogen's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Neogen assets, the company is considered highly leveraged. Understanding the composition and structure of overall Neogen debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.Understanding Neogen Total Liabilities
Neogen liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Neogen has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Neogen balance sheet include debt obligations and money owed to different Neogen vendors, workers, and loan providers. Below is the chart of Neogen short long-term liabilities accounts currently reported on its balance sheet. You can use Neogen financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Neogen's Liquidity
Neogen financial leverage refers to using borrowed capital as a funding source to finance Neogen ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Neogen financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Neogen's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Neogen's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Neogen's total debt and its cash.
A Deeper look at Neogen
The current price rise of Neogen may encourage stockholders to take a closer look at the firm as it is trading at a share price of 19.45 on very low momentum in trading volume. The company directors and management may have good odds in positioning the firm resources to exploit market volatility in February. The stock standard deviation of daily returns for 90 days investing horizon is currently 2.14. The current volatility is consistent with the ongoing market swings in December 2023 as well as with Neogen unsystematic, company-specific events.
As Warren Buffet once wisely noted, be fearful when others are greedy and greedy when others are fearful. This sentiment rings true for investors eyeing Neogen Corporation (NASDAQ: NEOG).Despite a challenging operating margin of 0.09% and an EBIT loss of $50.9M, the company's robust net tangible assets of $3.1B and net working capital of $440.5M suggest a strong financial foundation. The company's risk-adjusted performance of 0.0576, although modest, indicates that Neogen has been managing its risks reasonably well. However, the downside deviation of 2.1 and a probability of bankruptcy at 22.30% signal potential volatility and risk. Therefore, investors should consider potential dips in Neogen's performance as attractive entry points in February. With a market capitalization of $4.23B and a price-to-sales ratio of 4.60X, the stock offers a compelling value proposition for those willing to weather short-term uncertainties for long-term gains. .
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