This biotech has been posting double-digit sales and triple-digit earnings growth. The company beat first quarter estimates, earning $0.97 vs. the $0.25 analysts had expected.
Anika Therapeutics, Inc. (ANIK)
from Validea Hot List
Small-Cap Growth Investor
Based on: Motley Fool
Guru Score: 93%
Anika Therapeutics, Inc. (ANIK) develops, manufactures and commercializes therapeutic products for tissue protection, healing and repair. These products are based on hyaluronic acid (HA), a naturally occurring, biocompatible polymer found throughout the body.
PROFIT MARGIN: [PASS]
This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. ANIK’s profit margin is 34.67%.
RELATIVE STRENGTH: [PASS]
Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been rising much quicker than the market tend to keep rising. ANIK has a relative strength of 93.
COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: [PASS]
Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These rates for ANIK (361.90% for EPS, and 123.02% for Sales) are good enough to pass.
CASH FLOW FROM OPERATIONS: [PASS]
A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. ANIK’s free cash flow is $1.67.
PROFIT MARGIN CONSISTENCY: [PASS]
ANIK’s profit margin has been consistent or even increasing over the past three years (Current year: 27.41%, Last year: 16.48%, Two years ago: 13.08%). It is a sign of good management and a healthy and competitive enterprise.
R&D AS A PERCENTAGE OF SALES: [PASS]
ANIK is either maintaining the same levels of R&D expenditures (currently $7.1 million) or increasing these levels which is a good sign. This criterion is particularly important for high-tech and medical stocks because they are so R&D dependant.
CASH AND CASH EQUIVALENTS: [PASS]
ANIK’s level of cash $63.3 million passes this criteria. If a company is a cash generator, like ANIK, it has the ability to pay off debt (if it has any) or acquire other companies.
ACCOUNT RECEIVABLE TO SALES: [PASS]
This methodology wants to make sure that a company’s accounts receivables do not get significantly out of line with sales. Accounts Receivable to Sales for ANIK was 30.07% last year, while for this year it is 24.96%. Since the AR to sales is decreasing by -5.11% the stock passes this criterion.
LONG TERM DEBT/EQUITY RATIO: [PASS]
ANIK’s trailing twelve-month Debt/Equity ratio (0.00%) is at a great level according to this methodology because the superior companies that you are looking for don’t need to borrow money in order to grow.
“THE FOOL RATIO” (P/E TO GROWTH): [PASS]
The “Fool Ratio” is an extremely important aspect of this analysis. If the company has attractive fundamentals and its Fool Ratio is 0.5 or less (ANIK’s is 0.45), the shares are looked upon favorably.
John Reese, Validea Hot List Newsletter, www.validea.com, 877-439-0506, June 20, 2014