Laboratory Corporation of America Holdings (NYSE:LH) - Share price, News & Analysis

Q: What is the Fair Price of LH when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

LH ($242.56) is trading below our estimate of [[fair value]] ($557.64)

LH fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	2/6
Financial Health	5/6
Dividends	1/6

LH Stock Overview

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company worldwide.

Rewards

Trading at 56.5% below our estimate of its fair value

Risk Analysis

Earnings are forecast to decline by an average of 1.6% per year for the next 3 years

Laboratory Corporation of America Holdings Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Laboratory Corporation of America Holdings
Historical stock prices
Current Share Price	US$242.56
52 Week High	US$317.17
52 Week Low	US$212.40
Beta	1.04
1 Month Change	-5.94%
3 Month Change	-12.25%
1 Year Change	-9.24%
3 Year Change	40.29%
5 Year Change	57.36%
Change since IPO	646.34%

Recent News & Updates

Jun 05

Laboratory Corp: 15% Reward Asymmetry Under-Reflected, Seeking Exit At $280 Per Share

Laboratory Corporation of America's defensible cash production separates it from peers in the current macro-climate. Shares have traded down in recent times, and we feel the company's bottom line fundamentals are under-appreciated by the market. We are seeking a return objective of 15% or roughly $37 per share with a potential exit at $279–$289. Here, we cover the quantamental factors in LH's investment debate.

May 16

Returns On Capital Are Showing Encouraging Signs At Laboratory Corporation of America Holdings (NYSE:LH)

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for...

Shareholder Returns

	LH	US Healthcare	US Market
7D	7.2%	7.8%	6.6%
1Y	-9.2%	2.5%	-18.4%

Return vs Industry: LH underperformed the US Healthcare industry which returned 2.4% over the past year.

Return vs Market: LH exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is LH's price volatile compared to industry and market?
LH volatility
LH Average Weekly Movement	4.7%
Healthcare Industry Average Movement	9.5%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.6%
10% least volatile stocks in US Market	3.2%

Stable Share Price: LH is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: LH's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1971	71,725	Adam Schechter	https://www.labcorp.com

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company worldwide. It operates in two segments, Labcorp Diagnostics (Dx) and Labcorp Drug Development (DD). It offers various tests, such as blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, Pap tests, hemoglobin A1C and vitamin D products, prostate-specific antigens, tests for sexually transmitted diseases, hepatitis C tests, microbiology cultures and procedures, and alcohol and other substance-abuse tests.

Laboratory Corporation of America Holdings Fundamentals Summary

How do Laboratory Corporation of America Holdings's earnings and revenue compare to its market cap?
LH fundamental statistics
Market Cap	US$22.49b
Earnings (TTM)	US$2.10b
Revenue (TTM)	US$15.86b

10.7x

P/E Ratio

1.4x

P/S Ratio

Is LH overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
LH income statement (TTM)
Revenue	US$15.86b
Cost of Revenue	US$10.60b
Gross Profit	US$5.26b
Other Expenses	US$3.16b
Earnings	US$2.10b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	22.65
Gross Margin	33.16%
Net Profit Margin	13.24%
Debt/Equity Ratio	50.4%

How did LH perform over the long term?

See historical performance and comparison

Dividends

1.2%

Current Dividend Yield

n/a

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is LH undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LH?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for LH. This is calculated by dividing LH's market cap by their current preferred multiple.
What is LH's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$22.49b

LH key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.7x
Enterprise Value/EBITDA	7.5x
PEG Ratio	-6.5x

Price to Earnings Ratio vs Peers

How does LH's PE Ratio compare to its peers?

LH PE Ratio vs Peers

The above table shows the PE ratio for LH vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	16.8x

Forward PE

Price-To-Earnings vs Peers: LH is good value based on its Price-To-Earnings Ratio (10.7x) compared to the peer average (16.8x).

Price to Earnings Ratio vs Industry

How does LH's PE Ratio compare vs other companies in the US Healthcare Industry?

Price-To-Earnings vs Industry: LH is good value based on its Price-To-Earnings Ratio (10.7x) compared to the US Healthcare industry average (18.7x)

Price to Earnings Ratio vs Fair Ratio

What is LH's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LH PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	10.7x
Fair PE Ratio	23.2x

Price-To-Earnings vs Fair Ratio: LH is good value based on its Price-To-Earnings Ratio (10.7x) compared to the estimated Fair Price-To-Earnings Ratio (23.2x).

Share Price vs Fair Value

What is the Fair Price of LH when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LH ($242.56) is trading below our estimate of fair value ($557.64)

Significantly Below Fair Value: LH is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: LH's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Laboratory Corporation of America Holdings forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-1.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: LH's earnings are forecast to decline over the next 3 years (-1.6% per year).

Earnings vs Market: LH's earnings are forecast to decline over the next 3 years (-1.6% per year).

High Growth Earnings: LH's earnings are forecast to decline over the next 3 years.

Revenue vs Market: LH's revenue (3% per year) is forecast to grow slower than the US market (8.4% per year).

High Growth Revenue: LH's revenue (3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: LH's Return on Equity is forecast to be low in 3 years time (14.7%).

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Past Performance

How has Laboratory Corporation of America Holdings performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

24.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LH has high quality earnings.

Growing Profit Margin: LH's current net profit margins (13.2%) are lower than last year (17.3%).

Past Earnings Growth Analysis

Earnings Trend: LH's earnings have grown significantly by 24.4% per year over the past 5 years.

Accelerating Growth: LH's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: LH had negative earnings growth (-20.6%) over the past year, making it difficult to compare to the Healthcare industry average (9.8%).

Return on Equity

High ROE: LH's Return on Equity (19.6%) is considered low.

Discover strong past performing companies

Financial Health

How is Laboratory Corporation of America Holdings's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: LH's short term assets ($5.2B) exceed its short term liabilities ($2.6B).

Long Term Liabilities: LH's short term assets ($5.2B) do not cover its long term liabilities ($7.3B).

Debt to Equity History and Analysis

Debt Level: LH's net debt to equity ratio (38.9%) is considered satisfactory.

Reducing Debt: LH's debt to equity ratio has reduced from 103.4% to 50.4% over the past 5 years.

Debt Coverage: LH's debt is well covered by operating cash flow (42.6%).

Interest Coverage: LH's interest payments on its debt are well covered by EBIT (15.8x coverage).

Balance Sheet

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Dividend

What is Laboratory Corporation of America Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

1/6

Dividend Score 1/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

1.19%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: LH's dividend (1.19%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: LH's dividend (1.19%) is low compared to the top 25% of dividend payers in the US market (4.24%).

Stability and Growth of Payments

Stable Dividend: Too early to tell whether LH's dividend payments have been stable as they only just started paying a dividend.

Growing Dividend: Too early to tell if LH's dividend payments are increasing as they only just started paying a dividend.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (14.6%), LH's dividend payments are thoroughly covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

4.0yrs

Average management tenure

CEO

Adam Schechter (56 yo)

2.58yrs

Tenure

US$20,551,605

Compensation

Mr. Adam H. Schechter serves as President & Chief Executive Officer at Laboratory Corporation of America Holdings since November 01, 2019 and serves as its Chairman since May 13, 2020. He served as a Speci...

CEO Compensation Analysis

Compensation vs Market: Adam's total compensation ($USD20.55M) is above average for companies of similar size in the US market ($USD13.44M).

Compensation vs Earnings: Adam's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Experienced Management: LH's management team is considered experienced (4 years average tenure).

Board Members

Experienced Board: LH's board of directors are considered experienced (8.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: LH insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/26 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31