Valuation Scorecard: Stock Rating C-Neutral (4/8/24)-PerkinElmer Inc. (PKI).

PerkinElmer’s common shares will need to reach $178 to achieve average annual stock market performance of 9.0% over the next 6 years. PerkinElmer’s stock price will need to reach $210 by 2029 to achieve upper quartile performance. At the current price of $106, what is the market’s view of PerkinElmer’s future operating performance?

Executive Summary

• Key PerkinElmer characteristics: high expected growth, instability, below average financial strength, and very low profitability. A big negative influence on PerkinElmer’s valuation is its poor Profitability.
• Very low valuation, lagging shareholder returns. Current valuation levels are very low relative to the PerkinElmer Peer Group. Recent market returns have substantially underperformed the PerkinElmer Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, PerkinElmer shares should reach a level of $319 by 2029 — an 20.3% per year total shareholder return. A 2029 stock price of $178 would reflect median performance and a price of $210 would be required to reach upper quartile performance.
• PerkinElmer’s achieved growth is slightly below average. Historical growth has been below average relative to the PerkinElmer Peer Group and forecasted growth is relatively very high. Equity Growth has been superior. Revenue Growth, and EPS Growth have lagged. PerkinElmer’s historical income statement growth has been lower than balance sheet growth. Revenue growth has fallen short of asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity. PerkinElmer’s consensus growth expectations are lower than historical growth.
• Profitability has been PerkinElmer’s biggest valuation weakness. Asset Turnover, Pretax Margin, Return on Equity, and Pretax ROA are all group lagging. These factors have negatively affected market perceptions of PerkinElmer. The company has very low cash and will have to work to generate attractive investments and improve valuation.
• PerkinElmer’s risk profile is unfavorable. Overall variability has been above average with above average revenue variability, above average E.P.S. variability, and only average stock price volatility. Financial Strength is below average and earnings’ expectations are very low. The debt/capital ratio has declined.

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