Is GBS Stock a Buy Under $1?
The shares of biosensor diagnostic technology company GBS's (GBS) have slumped more than 50% in price this year, reflecting investors' pessimism. The company's weak financial position seems to be overshadowing...
The shares of biosensor diagnostic technology company GBS's (GBS) have slumped more than 50% in price this year, reflecting investors' pessimism. The company's weak financial position seems to be overshadowing the company's positive developments. So, will the penny stock be able to gain momentum anytime soon? Read on, let's discuss.
Biosensor diagnostic technology company GBS Inc. (GBS) in New York City offers various products, including Biosensor Platform Technology, Saliva Glucose Test (SGT), and Saliva Glucose Biosensor (SGB). GBS' shares have nosedived 89.1% in price over the past year and 80.8% over the past six months. The stock has declined 53.3% year-to-date to close the last trading session at $0.67.
The company had earlier announced plans to commence preparation for clinical trials of its rapid SARS-CoV-2 Antibody test following a clinical validation study. "We believe evidence from the validation study at the Wyss Institute supports the efficacy of our SARS-CoV-2 Antibody test, and we are now in a confident position to commence preparations for the next stage of trials," said Interim GBS CEO and Chairman of the Board, Dr. Steven Boyages. Also, GBS, in collaboration with Life Science Biosensor Diagnostics Pty Ltd (LSBD), the licensor of the Rapid Saliva Glucose Test, applied for FDA Breakthrough Device Designation to provide LSBD with regulatory approval for its non-invasive, real-time Saliva Glucose test.
However, the company's weak financial position has raised investor concerns, overshadowing the positive developments.
Here is what could shape GBS's performance in the near term:
For the fiscal second quarter, ended Dec. 31, 2021, GBS' total revenues declined 37.2% year-over-year to $177,791. Its loss from operations grew 277.9% from its year-ago value to $3.47 million. Also, its net loss came in at $3.46 million, reflecting an increase of 74% year-over-year, while its net loss per share was $0.23. In addition, the company's trailing-12-month net loss and net loss per share stood at $8.87 million and $0.67, respectively. And its trailing-12-month cash flow from operations and levered free cash flow came in at $9.18 million and $5.53 million, respectively.
GBS' negative 279.46% levered FCF margin is substantially lower than the negative 0.48% industry average. Also, its ROE and ROA of negative 61.42% and 58.24%, respectively, compare with the negative 36.11% and 23.57% industry averages . Furthermore, its 0.11% asset turnover ratio is 66.9% lower than the industry average.
POWR Ratings Reflect This Bleak Prospects
GBS has an overall F rating, which translates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a D grade for Growth, which is consistent with its bleak financial growth.
It has a D grade for Quality, which is in sync with its negative profitability metrics.
Among the 166 stocks in the D-rated Medical - Devices & Equipment industry, GBS is ranked #159.
Beyond what I have stated above, you can also view GBS's grades for Sentiment, Stability, Momentum, and Value here.
View the top-rated stocks in the Medical - Devices & Equipment industry here.
GBS is investing heavily in breakthrough product developments and engages with partners around the globe to initiate clinical studies, build class manufacturing facilities and establish sales partnership opportunities in Asia. However, its financial position is concerning, with analysts expecting its EPS to remain negative this year. Thus, we think it could be wise to avoid the stock for now.
How Does GBS Inc. (GBS) Stack Up Against its Peers?
While GBS has an overall POWR Rating of F, one might want to consider investing in the following Medical - Devices & Equipment stocks with an A (Strong Buy) rating: Fonar Corporation (FONR), Electromed, Inc. (ELMD), and Abbott Laboratories (ABT).
GBS shares fell $0.01 (-1.49%) in premarket trading Wednesday. Year-to-date, GBS has declined -53.31%, versus a -12.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree's keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master's degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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