Valuation Scorecard: Stock Rating F-Lowest (3/27/24)-ProPhase Labs Inc (PRPH).


ProPhase Labs’ common shares will need to reach $10 to achieve average annual stock market performance of 9.0% over the next 6 years. To achieve Upper quartile performance, ProPhase Labs’ stock price will need to reach $12 by 2028. At the current price of $6, what are market expectations regarding ProPhase Labs’ future operating performance?

Executive Summary

  • ProPhase Labs’ important characteristics: high expected growth, high financial strength, high stability, and very low profitability. A big positive influence on ProPhase Labs’ valuation is its superior Risk Profile.
  • High valuation, below market shareholder returns. Current valuation levels are high relative to the ProPhase Labs Peer Group. Recent market returns have underperformed the ProPhase Labs Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, ProPhase Labs shares should reach a level of $-15 by 2028 — an -1000% per year total shareholder return. A 2028 stock price of $10 would reflect median performance and a price of $12 would be required to reach upper quartile performance.
  • ProPhase Labs’ past growth is very high. Historical growth has been very high relative to the ProPhase Labs Peer Group and forecasted growth is relatively very high. Equity Growth, Revenue Growth, and Asset Growth have been superior. These factors have buoyed market perceptions of ProPhase Labs. ProPhase Labs’ historical income statement and balance sheet growth are not available.
  • Asset Turnover is group leading. Pretax ROA, Pretax Margin, and Return on Equity are group lagging. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
  • Risk Profile has been ProPhase Labs’ biggest valuation strength. ProPhase Labs’ risk profile is very favorable. Overall variability has been very high with very high revenue variability, very low E.P.S. variability, and very low stock price volatility. Financial Strength is relatively very high and earnings’ expectations are relatively high. The debt/capital ratio has declined very significantly.

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