Novanta Inc. Fundamental Analysis (NASDAQ: NOVT)
Novanta Inc. (NASDAQ: NOVT) shows weak financial fundamentals with a PE ratio of 105.52, profit margin of 6.00%, and ROE of 4.90%. The company generates $0.9B in annual revenue with moderate year-over-year growth of 3.30%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 45.1/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze NOVT's fundamental strength across five key dimensions:
Efficiency Score
WeakNOVT struggles to generate sufficient returns from assets.
Valuation Score
ModerateNOVT shows balanced valuation metrics.
Growth Score
WeakNOVT faces weak or negative growth trends.
Financial Health Score
ExcellentNOVT maintains a strong and stable balance sheet.
Profitability Score
WeakNOVT struggles to sustain strong margins.
Key Financial Metrics
Is NOVT Expensive or Cheap?
P/E Ratio
NOVT trades at 105.52 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, NOVT's PEG of -16.31 indicates potential undervaluation.
Price to Book
The market values Novanta Inc. at 4.26 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 45.92 times EBITDA. This signals the market has high growth expectations.
How Well Does NOVT Make Money?
Net Profit Margin
For every $100 in sales, Novanta Inc. keeps $6.00 as profit after all expenses.
Operating Margin
Core operations generate 10.43 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $4.90 in profit for every $100 of shareholder equity.
ROA
Novanta Inc. generates $2.89 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Novanta Inc. produces operating cash flow of $116.23M, showing steady but balanced cash generation.
Free Cash Flow
Novanta Inc. generates strong free cash flow of $99.24M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.79 in free cash annually.
FCF Yield
NOVT converts 1.91% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
105.52
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-16.31
vs 25 benchmark
P/B Ratio
Price to book value ratio
4.26
vs 25 benchmark
P/S Ratio
Price to sales ratio
5.80
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.17
vs 25 benchmark
Current Ratio
Current assets to current liabilities
4.57
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.05
vs 25 benchmark
ROA
Return on assets percentage
0.03
vs 25 benchmark
ROCE
Return on capital employed
0.06
vs 25 benchmark
How NOVT Stacks Against Its Sector Peers
| Metric | NOVT Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 105.52 | 35.70 | Worse (Expensive) |
| ROE | 4.90% | 723.00% | Weak |
| Net Margin | 6.00% | -131080.00% (disorted) | Weak |
| Debt/Equity | 0.17 | 0.22 | Strong (Low Leverage) |
| Current Ratio | 4.57 | 5.96 | Strong Liquidity |
| ROA | 2.89% | 247.00% | Weak |
NOVT outperforms its industry in 2 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Novanta Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
59.47%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
16.13%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
-56.13%
Industry Style: Growth, Innovation, High Beta
Declining