Lannett Company, Inc. (NYSE:LCI)

CAPS Rating: 2 out of 5

The Company develops, manufactures, markets and distributes generic versions of pharmaceutical products.

Results 1 - 18 of 18

Recs

0
Member Avatar AnsgarJohn (99.16) Submitted: 8/27/2014 12:24:26 PM : Outperform Start Price: $38.87 LCI Score: +1.12

Only stock in Validea Motley Fool screen:

Detailed Analysis   Guru Score: 91%   Find Other Stocks that Pass This Guru

PROFIT MARGIN: [PASS]

This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. The companies that pass this criterion have strong positions within their respective industries and offer greater shareholder returns. A true test of the quality of a company is that they can sustain this margin. LCI's profit margin of 15.96% passes this test.

RELATIVE STRENGTH: [PASS]

The investor must look at the relative strength of the company in question. Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been rising much quicker than the market tend to keep rising. LCI, with a relative strength of 95, satisfies this test.

COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: [PASS]

Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for LCI (342.86% for EPS, and 105.02% for Sales) are good enough to pass.

INSIDER HOLDINGS: [PASS]

LCI's insiders should own at least 10% (they own 17.09% ) of the company's outstanding shares which is the minimum required. A high percentage typically indicates that the insiders are confident that the company will do well.

CASH FLOW FROM OPERATIONS: [PASS]

A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. LCI's free cash flow of $0.65 per share passes this test.

PROFIT MARGIN CONSISTENCY: [PASS]

LCI's profit margin has been consistent or even increasing over the past three years (Current year: 8.82%, Last year: 3.21%, Two years ago: -0.26%), passing the requirement. It is a sign of good management and a healthy and competitive enterprise.

R&D AS A PERCENTAGE OF SALES: [PASS]

LCI is either maintaining the same levels of R&D expenditures(currently $16.3 million) or increasing these levels which is a good sign. This allows the company to develop the superior technology and new products that will put everyone else out of business. This criterion is particularly important for high-tech and medical stocks because they are so R&D dependant.

CASH AND CASH EQUIVALENTS: [PASS]

LCI's level of cash $51.2 million passes this criteria. If a company is a cash generator, like LCI, it has the ability to pay off debt (if it has any) or acquire other companies. Most importantly, good operations generate cash.

INVENTORY TO SALES: [PASS]

This methodology strongly believes that companies, especially small ones, should have tight control over inventory. It's a warning sign if a company's inventory relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Inventory to Sales for LCI was 22.00% last year, while for this year it is 21.54%. Since the inventory to sales is decreasing by -0.47% the stock passes this criterion.

ACCOUNT RECEIVABLE TO SALES: [PASS]

This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for LCI was 23.34% last year, while for this year it is 17.48%. Since the AR to sales is decreasing by -5.86% the stock passes this criterion.

LONG TERM DEBT/EQUITY RATIO: [PASS]

LCI's trailing twelve-month Debt/Equity ratio (0.39%) is a little higher than what this methodology is looking for, but is still at an acceptable level. The superior companies that you are looking for don't need to borrow money in order to grow. This company has borrowed very little which is still OK.

"THE FOOL RATIO" (P/E TO GROWTH): [FAIL]

The "Fool Ratio" is an extremely important aspect of this analysis. The methodology says consider shorting shares when the company's Fool Ratio is greater than 1.30. LCI's PEG Ratio of 2.68 is excessively high.

The following criteria for LCI are less important which means you would place less emphasis on them when making your investment decision using this strategy:

AVERAGE SHARES OUTSTANDING: [PASS]

LCI has not been significantly increasing the number of shares outstanding within recent years which is a good sign. LCI currently has 37.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock.

SALES: [PASS]

Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. LCI's sales of $233.3 million based on trailing 12 month sales, are fine, making this company one such "prospective gem". LCI passes the sales test.

DAILY DOLLAR VOLUME: [FAIL]

LCI does not pass the Daily Dollar Volume (DDV of $27.3 million) test. It exceeds the maximum requirement of $25 million. Stocks that fail the test are too liquid for a small individual investor and many institutions have already discovered it.

PRICE: [PASS]

This is a very insignificant criterion for this methodology. But basically, low prices are chosen because "small numbers multiply more rapidly than large ones" and the potential for big returns expands. LCI with a price of $39.35 passes the price test, even though it doesn't fall in the preferred range. The price should be above $7 in order to eliminate penny stocks and below $20 since most stocks in this price range are undiscovered by the institutions.

INCOME TAX PERCENTAGE: [PASS]

LCI's income tax paid expressed as a percentage of pretax income this year was (35.30%) and last year (39.27%) are greater than 20% which is an acceptable level. If the tax rate is below 20% this could mean that the earnings that were reported were unrealistically inflated due to the lower level of income tax paid. This is a concern.

Recs

0
Member Avatar griderX (96.58) Submitted: 8/20/2014 3:52:22 PM : Outperform Start Price: $36.84 LCI Score: +6.02

Taking advantage of short term price inflation on generics. I don't foresee this as sustainable, thus short term outperform...looking for a pop.

Recs

1
Member Avatar GAGA (< 20) Submitted: 2/5/2014 11:49:45 AM : Outperform Start Price: $36.23 LCI Score: +1.00

OBAMA CARE

Recs

0
Member Avatar Coreylan (< 20) Submitted: 12/26/2013 11:33:38 PM : Outperform Start Price: $36.23 LCI Score: +1.00

Affordable Care Act

Recs

1
Member Avatar tomi1970 (49.70) Submitted: 11/6/2013 10:22:00 PM : Underperform Start Price: $24.40 LCI Score: -48.32

cannot justify value at 23, see it at 9

Recs

0
Member Avatar gunterle (65.28) Submitted: 4/10/2013 2:04:53 PM : Outperform Start Price: $10.61 LCI Score: +244.73

signal

Recs

0
Member Avatar xaneti (73.92) Submitted: 1/18/2013 5:52:53 PM : Outperform Start Price: $5.90 LCI Score: +532.14

charles schwab screener A+ Pharma Generic low PEG < 1

Recs

0
Member Avatar worknhard (< 20) Submitted: 1/30/2012 10:30:15 AM : Outperform Start Price: $4.89 LCI Score: +651.35

FDA approvals opened up after 483's were fixed.
Backlog of approvals to come
Cody labs starting to hit stride and provide profits.

Recs

0
Member Avatar maniacdog (33.98) Submitted: 6/21/2011 10:14:22 AM : Outperform Start Price: $5.28 LCI Score: +590.87

Looks like morphine sulfate is the rage.

Recs

0
Member Avatar stktrdr1 (< 20) Submitted: 11/6/2010 10:34:17 PM : Outperform Start Price: $6.25 LCI Score: +466.02

LCI seems to have plans for new products and marketing they look as if they will do well over the next few months holding their own while the market makes the necessasry corrections.

Recs

0
Member Avatar meberlein (< 20) Submitted: 8/3/2009 8:36:11 AM : Outperform Start Price: $8.64 LCI Score: +253.16

The stock has been on the rise as of late and is doing so on the back of solid financials. The company in the past five years has had a top out in the low twenties with similiar data to what it is displaying currently. 200% increase within the next 1-2 years.

Recs

0
Member Avatar VoodooEconomist (39.51) Submitted: 4/14/2009 3:21:30 PM : Underperform Start Price: $5.79 LCI Score: -440.39

Correction only

Recs

1
Member Avatar FinancialModeler (26.79) Submitted: 3/11/2009 4:08:43 PM : Underperform Start Price: $5.30 LCI Score: -461.83

Whoever said this stock is under valued needs to learn what value really is. LCI has a PE ratio over 100. The stock trades within 10% of its 52 week high. Returns on assets, equity, and capital is almost nothing. No dividend. Less than 2% profit margin is weak. This is not value.

I want to see this stock drop down to $3 per share before I close this out.

Recs

0
Member Avatar meetme25 (39.85) Submitted: 10/11/2007 12:20:00 AM : Outperform Start Price: $4.63 LCI Score: +716.54

Insider buys

Recs

0
Member Avatar obiwankenobe1250 (92.32) Submitted: 12/10/2006 9:01:16 PM : Outperform Start Price: $6.69 LCI Score: +438.01

Great business in a growth industry. Fundamentals look real solid.

Recs

0
Member Avatar workinharder (< 20) Submitted: 12/7/2006 10:25:01 PM : Outperform Start Price: $6.66 LCI Score: +440.31

New facilities, managment team refocused, many applications awaiting approval.

Recs

0
Member Avatar RandyWill (94.66) Submitted: 11/26/2006 2:02:03 PM : Outperform Start Price: $7.00 LCI Score: +410.62

Seems underpriced given earnings projected by the lone analyst. Haven't had time to really dig into it though.

Recs

0
Member Avatar fsrodrigu7 (< 20) Submitted: 10/1/2006 2:43:52 PM : Outperform Start Price: $5.32 LCI Score: +580.66

beaten, high value, lhigh growth, low price, rebounding

Results 1 - 18 of 18

Featured Broker Partners


Advertisement