Castle Biosciences Inc (NASDAQ: CSTL)

Sector: Healthcare Industry: Diagnostics & Research CIK: 0001447362
Market Cap 1.19 Bn
P/B 2.55
P/E -97.29
P/S 3.47
ROIC (Qtr) -9.08
Div Yield % 0.00
Rev 1y % (Qtr) -3.19
Total Debt (Qtr) 37.14 Mn
Debt/Equity (Qtr) 0.08

About

Castle Biosciences, Inc. (CSTL) is a molecular diagnostics company operating in the industry of developing and commercializing diagnostic tests that use genetic, genomic, or proteomic information to aid in the diagnosis, treatment, and management of various diseases. The company's main business activities involve offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett's esophagus, uveal melanoma, and mental health conditions. Castle Biosciences operates in the United States and its tests...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 61.78M provides robust 1.66x coverage of total debt 37.14M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 85.56M provide 59.04x coverage of short-term debt 1.45M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 460.94M provides 12.41x coverage of total debt 37.14M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 61.78M provides exceptional 401.18x coverage of interest expenses 154000, showing strong debt service capability.
  • Short-term investments of 201.99M provide solid 4.85x coverage of other current liabilities 41.65M, indicating strong liquidity.

Bear case

  • Operating cash flow of 61.78M barely covers its investment activities of (63.43M), with a coverage ratio of -0.97, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (63.43M) provide weak support for R&D spending of 50.11M, which is -1.27x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 85.56M provide limited coverage of acquisition spending of (18.73M), which is -4.57x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 51.53M relative to inventory of 8.65M (5.96 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • The company's operating cash flow of 61.78M shows concerning coverage of stock compensation expenses of 45.93M, with a 1.35 ratio indicating potential earnings quality issues.

Peer comparison

Companies in the Diagnostics & Research
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TMO Thermo Fisher Scientific Inc. 229.80 Bn 34.98 5.25 35.68 Bn
2 DHR Danaher Corp /De/ 168.69 Bn 48.16 6.95 16.86 Bn
3 IDXX Idexx Laboratories Inc /De 57.54 Bn 56.01 13.81 1.09 Bn
4 IQV Iqvia Holdings Inc. 42.51 Bn 33.13 2.67 15.19 Bn
5 A Agilent Technologies, Inc. 41.38 Bn 31.76 5.96 3.35 Bn
6 NTRA Natera, Inc. 32.34 Bn -104.61 15.28 0.18 Bn
7 MTD Mettler Toledo International Inc/ 30.48 Bn 36.47 7.73 2.21 Bn
8 WAT Waters Corp /De/ 23.59 Bn 36.36 7.60 1.49 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.04 2.83
EV to Cash from Ops. EV/CFO 18.54 19.40
EV to Debt EV to Debt 30.85 55.09
EV to EBIT EV/EBIT -61.06 19.01
EV to EBITDA EV/EBITDA 145.44 4.60
EV to Free Cash Flow [EV/FCF] EV/FCF 45.06 -2.36
EV to Market Cap EV to Market Cap 0.96 1.57
EV to Revenue EV/Rev 3.33 5.06
Price to Book Value [P/B] P/B 2.55 1.40
Price to Earnings [P/E] P/E -97.29 19.36
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -2.00
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.86
Dividend per Basic Share Div per Share (Qtr) 0.00 0.19
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.94
Interest Coverage Int. cover (Qtr) -121.82 -129.02
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -48.17 -35.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -9.90 24.08
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.25
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -291.41 -55.31
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -36.55 -457.27
EBIT Growth (1y) % EBIT 1y % (Qtr) -261.38 -42.01
EBT Growth (1y) % EBT 1y % (Qtr) -269.82 -72.92
EPS Growth (1y) % EPS 1y % (Qtr) -286.36 -70.88
FCF Growth (1y) % FCF 1y % (Qtr) -26.41 56.94
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.52 185.76
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.61 0.57
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 1.55 1.23
Current Ratio Curr Ratio (Qtr) 6.47 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.08 -0.84
Interest Cover Ratio Int Coverage (Qtr) -121.82 -129.02
Times Interest Earned Times Interest Earned (Qtr) -121.82 -129.02
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.00 -98.25
EBIT Margin % EBIT Margin % (Qtr) -5.46 -116.67
EBT Margin % EBT Margin % (Qtr) -5.51 -115.28
Gross Margin % Gross Margin % (Qtr) 79.90 44.77
Net Profit Margin % Net Margin % (Qtr) -3.60 -114.12