Stock Analysis

Harvard Bioscience, Inc. (NASDAQ:HBIO) Stock's 25% Dive Might Signal An Opportunity But It Requires Some Scrutiny

NasdaqGM:HBIO
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The Harvard Bioscience, Inc. (NASDAQ:HBIO) share price has fared very poorly over the last month, falling by a substantial 25%. Still, a bad month hasn't completely ruined the past year with the stock gaining 31%, which is great even in a bull market.

Since its price has dipped substantially, Harvard Bioscience may be sending very bullish signals at the moment with its price-to-sales (or "P/S") ratio of 1.6x, since almost half of all companies in the Life Sciences industry in the United States have P/S ratios greater than 4.1x and even P/S higher than 8x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

View our latest analysis for Harvard Bioscience

ps-multiple-vs-industry
NasdaqGM:HBIO Price to Sales Ratio vs Industry August 10th 2023

What Does Harvard Bioscience's Recent Performance Look Like?

While the industry has experienced revenue growth lately, Harvard Bioscience's revenue has gone into reverse gear, which is not great. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value.

Want the full picture on analyst estimates for the company? Then our free report on Harvard Bioscience will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For Harvard Bioscience?

Harvard Bioscience's P/S ratio would be typical for a company that's expected to deliver very poor growth or even falling revenue, and importantly, perform much worse than the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 5.5%. That put a dampener on the good run it was having over the longer-term as its three-year revenue growth is still a noteworthy 8.2% in total. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been mostly respectable for the company.

Turning to the outlook, the next year should generate growth of 7.1% as estimated by the dual analysts watching the company. That's shaping up to be materially higher than the 4.2% growth forecast for the broader industry.

With this in consideration, we find it intriguing that Harvard Bioscience's P/S sits behind most of its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

The Key Takeaway

Harvard Bioscience's P/S looks about as weak as its stock price lately. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

A look at Harvard Bioscience's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

Before you take the next step, you should know about the 1 warning sign for Harvard Bioscience that we have uncovered.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

Valuation is complex, but we're here to simplify it.

Discover if Harvard Bioscience might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

About NasdaqGM:HBIO

Harvard Bioscience

Develops, manufactures, and sells technologies, products, and services for life science applications in the United States and internationally.

Undervalued with excellent balance sheet.