The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Value Hounds


Subject:  Re: Neogen misses Date:  12/22/2011  11:32 AM
Author:  LeKitKat Number:  8699 of 25800

I have never thought of Neogen as a momentum stock and that's what it is doing today. It was one of the first companies I bought back in 2003. I bought for the management and the niche it occupies and it has been a good company to stick with except for maybe today. My basis with all the splits is around $5 so am inclined to let it suffer this momentary lapse. It has never been more than 4% of my port even though at times I wish it had been a lot more.

The miss does not say anything about the actual state of the company or the guys in charge--except maybe disappointing analysts can be hazardous to your price per share

This article by TMF suggests that growth by acquisition is flawed because Neogen has too much goodwill and intangibles on the balance sheet

OT here--these articles by the numbers are annoying. Not just this one because it pans NEOG, but all of them that are churned out by the dozens every day. The power point graphs are useless and the commentary is generic and vague and I feel cheated every time I mistakenly click on one hoping for some real content

But back to NEOG

It does grow by acquisition It has done so without accumulating debt. CFFO has nearly tripled over 5 years

This quarter was the second one with disappointing revenue growth. Q1 revenue grew 6% and Q2 was down to 4%. The market has been used to growth at 24% Q1 and Q2 2010. This was a significant decline and NEOG has been dropping fast since July as it became clear growth was slowing.

Remains to be seen whether they are going to get back to double digit growth. They are in a useful niche and competitive. I expect acquisitions will keep adding value and disagree with Rex Moore

The ROIC for 2010 [year ends May] was 15% and respectable. If the article had been worth reading, he would have calculated ROIC for all the companies rather than using a canned intangible/asset number that has no meaning in isolation.

Note to TMF--

Please make these articles worth our time. They are spread all over the web and are numerous as fungi coming up after the rainy season and impossible not to trip over. Lets forsake quantity and get back to the quality the Fool used to stand for
Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us