Embecta Corp. (NASDAQ: EMBC)

Sector: Healthcare Industry: Medical Instruments & Supplies CIK: 0001872789
Market Cap 633.88 Mn
P/B -1.03
P/E 4.54
P/S 0.59
ROIC (Qtr) 28.47
Div Yield % 5.52
Rev 1y % (Qtr) -0.27
Total Debt (Qtr) 1.39 Bn
Debt/Equity (Qtr) -2.27

About

Embecta Corp., a Delaware corporation and formerly a part of Becton, Dickinson and Company (BD), is a leading global medical device company specializing in the diabetes management sector. With a significant presence in over 100 countries, Embecta's solutions cater to the needs of more than 30 million people living with diabetes worldwide. The company's products are used by healthcare providers, pharmacies, and patients, making it a prominent player in the diabetes care industry. Embecta's primary business activities include the design, manufacturing,...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 204.40M provide 15.72x coverage of short-term debt 13M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 214.20M provides solid 0.91x coverage of current liabilities 234.70M, showing strong operational health.
  • Retained earnings of (411.10M) represent substantial 0.67x of equity (613.10M), indicating strong internal capital generation.
  • Cash reserves of 204.40M provide robust 0.87x coverage of current liabilities 234.70M, indicating strong short-term solvency.
  • Tangible assets of 1.04B provide robust 6.96x coverage of other current liabilities 149.60M, indicating strong asset backing.

Bear case

  • Operating cash flow of 214.20M provides thin coverage of dividend payments of (35.10M) with a -6.10 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of 1.70M provide weak support for R&D spending of 21.60M, which is 0.08x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Free cash flow of 215.90M provides weak coverage of capital expenditures of (1.70M), with a -127 ratio suggesting additional external financing needs for growth initiatives.
  • Free cash flow of 215.90M represents just -1.13x of debt issuance (191.20M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of (411.10M) provide limited buffer against comprehensive income items of (284.40M), which is 1.45x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Medical Instruments & Supplies
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ISRG Intuitive Surgical Inc 174.27 Bn 61.02 17.31 0.00 Bn
2 BDX Becton Dickinson & Co 59.72 Bn 37.77 3.14 19.18 Bn
3 RMD Resmed Inc 39.76 Bn 26.76 7.37 0.85 Bn
4 ALC Alcon Inc 38.93 Bn 37.18 3.82 5.24 Bn
5 WST West Pharmaceutical Services Inc 17.69 Bn 133.13 12.54 0.30 Bn
6 HOLX Hologic Inc 16.81 Bn 30.91 4.07 2.52 Bn
7 COO Cooper Companies, Inc. 16.37 Bn 43.67 4.00 2.51 Bn
8 ALGN Align Technology Inc 13.73 Bn 36.29 3.45 0.09 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.73 2.75
EV to Cash from Ops. EV/CFO 8.57 39.87
EV to Debt EV to Debt 1.32 27.09
EV to EBIT EV/EBIT 6.13 32.86
EV to EBITDA EV/EBITDA 5.26 19.31
EV to Free Cash Flow [EV/FCF] EV/FCF 8.50 0.88
EV to Market Cap EV to Market Cap 2.90 -4.26
EV to Revenue EV/Rev 1.70 252.61
Price to Book Value [P/B] P/B -1.03 6.13
Price to Earnings [P/E] P/E 4.54 184.03
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.97 -1.09
Dividend Payout Ratio % Div Payout % (Qtr) 25.10 1.36
Dividend per Basic Share Div per Share (Qtr) 0.60 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 16.26 8.74
Interest Coverage Int. cover (Qtr) 2.89 -117.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 111.64 -53.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -5.68 414.02
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -1.48
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -24.51 -57.42
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 78.69 -106.89
EBIT Growth (1y) % EBIT 1y % (Qtr) 111.29 -37.00
EBT Growth (1y) % EBT 1y % (Qtr) 570.89 -42.63
EPS Growth (1y) % EPS 1y % (Qtr) 139.00 -15.05
FCF Growth (1y) % FCF 1y % (Qtr) 647.06 56.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -3.54 67.95
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.02 0.54
Cash Payout Ratio Cash Payout (Qtr) 0.17 0.03
Cash Ratio Cash Ratio (Qtr) 0.87 2.51
Current Ratio Curr Ratio (Qtr) 2.64 7.80
Debt to Equity Ratio Debt/Equity (Qtr) -2.27 0.55
Interest Cover Ratio Int Coverage (Qtr) 2.89 -117.83
Times Interest Earned Times Interest Earned (Qtr) 2.89 -117.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 32.60 -2,368.59
EBIT Margin % EBIT Margin % (Qtr) 27.73 -2,472.59
EBT Margin % EBT Margin % (Qtr) 18.14 -2,442.52
Gross Margin % Gross Margin % (Qtr) 63.10 30.06
Net Profit Margin % Net Margin % (Qtr) 12.90 -2,438.49