Novanta Inc (NASDAQ: NOVT)

Sector: Technology Industry: Scientific & Technical Instruments CIK: 0001076930
Market Cap 5.12 Bn
P/B 6.39
P/E 96.90
P/S 5.33
ROIC (Qtr) 4.96
Div Yield % 0.00
Rev 1y % (Qtr) 1.40
Total Debt (Qtr) 501.92 Mn
Debt/Equity (Qtr) 0.63

About

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 89.22M provide 5.63x coverage of short-term debt 15.85M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 108.32M exceeds capital expenditure of 8.49M by 12.75x, indicating strong organic growth funding capability.
  • Operating cash flow of 116.81M provides solid 0.63x coverage of current liabilities 186.86M, showing strong operational health.
  • Operating cash flow of 116.81M fully covers other non-current liabilities 31.41M by 3.72x, showing strong long-term stability.
  • Tangible assets of 665.05M provide robust 9.39x coverage of other current liabilities 70.80M, indicating strong asset backing.

Bear case

  • Operating cash flow of 116.81M barely covers its investment activities of (72.78M), with a coverage ratio of -1.60, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (72.78M) provide weak support for R&D spending of 97.90M, which is -0.74x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 89.22M provide limited coverage of acquisition spending of (64.29M), which is -1.39x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 116.81M shows concerning coverage of stock compensation expenses of 25.93M, with a 4.50 ratio indicating potential earnings quality issues.
  • Operating earnings of 93.12M show weak coverage of depreciation charges of 59.22M, with a 1.57 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Scientific & Technical Instruments
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KEYS Keysight Technologies, Inc. 39.82 Bn 46.85 7.41 2.78 Bn
2 GRMN Garmin Ltd 38.76 Bn 32.74 7.98 0.16 Bn
3 COHR Coherent Corp. 38.06 Bn 197.98 6.05 3.55 Bn
4 TDY Teledyne Technologies Inc 30.31 Bn 37.07 5.05 2.53 Bn
5 FTV Fortive Corp 20.78 Bn 24.34 3.39 3.31 Bn
6 TRMB Trimble Inc. 15.98 Bn 44.70 4.44 1.39 Bn
7 MKSI Mks Inc 12.07 Bn 152.81 18.35 4.55 Bn
8 CGNX Cognex Corp 6.65 Bn 158.10 25.88 0.08 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.67 1.93
EV to Cash from Ops. EV/CFO 47.25 29.36
EV to Debt EV to Debt 11.00 25.24
EV to EBIT EV/EBIT 59.27 27.58
EV to EBITDA EV/EBITDA 35.58 21.48
EV to Free Cash Flow [EV/FCF] EV/FCF 50.95 22.65
EV to Market Cap EV to Market Cap 1.08 -7.15
EV to Revenue EV/Rev 5.75 6.94
Price to Book Value [P/B] P/B 6.39 7.17
Price to Earnings [P/E] P/E 96.90 48.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -16.33
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.77
Dividend per Basic Share Div per Share (Qtr) 0.00 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.82
Interest Coverage Int. cover (Qtr) 3.82 -13.58
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 59.68 -21.31
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.74 102.46
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -15.77 25.34
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -2.02 18.20
EBIT Growth (1y) % EBIT 1y % (Qtr) -10.92 20.16
EBT Growth (1y) % EBT 1y % (Qtr) -7.10 59.27
EPS Growth (1y) % EPS 1y % (Qtr) -12.57 74.17
FCF Growth (1y) % FCF 1y % (Qtr) -5.71 -26.48
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.97 34.23
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.64 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.05
Cash Ratio Cash Ratio (Qtr) 0.48 3.01
Current Ratio Curr Ratio (Qtr) 2.51 4.82
Debt to Equity Ratio Debt/Equity (Qtr) 0.63 0.66
Interest Cover Ratio Int Coverage (Qtr) 3.82 -13.58
Times Interest Earned Times Interest Earned (Qtr) 3.82 -13.58
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 15.90 -296.06
EBIT Margin % EBIT Margin % (Qtr) 9.70 -315.98
EBT Margin % EBT Margin % (Qtr) 7.16 -351.25
Gross Margin % Gross Margin % (Qtr) 44.80 40.12
Net Profit Margin % Net Margin % (Qtr) 5.50 -353.98