Trinity Biotech: Irish Eyes Smiling at Microcap Value

| About: Trinity Biotech (TRIB)

Trinity Biotech (NASDAQ:TRIB) is a U.S. listed Irish company which develops, manufactures and sells medical diagnostic products. These products are both laboratory-based tests and point-of-care diagnostics, which are administered and read in the presence of the patient. Its clinical laboratory portfolio includes instruments and assays for diagnosing blood disorders, infectious diseases and diabetes. In the point-of-care market, the company primarily sells tests for diagnosing HIV and other conditions at testing centers, public health facilities, and hospitals.

Though a small company with approximately $130 million in annual sales, Trinity is a global operation with manufacturing facilities in its native Ireland as well as in Germany, Sweden and the United States. Trinity offers its customers (which include the World Health Organization and the Centers for Disease Control) a portfolio of over five hundred products which are sold in over 80 countries though its own sales force as well as a network of distributors and strategic partners. .

We believe that Trinity Biotech is an attractive investment at its current price under $4 per share.

We recommend investing in Trinity Biotech for following reasons:

  1. Trinity Biotech has strong fundamentals and low valuations. The company gave a positive surprise in its most recent earning announcement on July 23, earning 14 cents per share as compared to 7 cents for the same period one year ago. Significantly, revenues in the point-of-care segment increased by over 50%, driven by sales of HIV testing kits in the US and Africa. Gross margins at Trinity are consistently over 45%. The share has recently been included in the Discounted Fundamental Strength ¨profit track¨ selection by Zacks Investment Research, largely due to Trinity´s strong balance sheet, low price/sales ratio of only 0.66 and a price/earnings growth ratio of 0.7
  2. Trinity Biotech supplies health care products which reduce patient care costs, a critical need throughout the world. We expect this to be a major driver of growth in the coming quarters, particularly as Trinity is scheduled to ramp up sales of several innovative new products in the point-of-care segment in the near future. When a health care provider is able to utilize a Trinity Biotech diagnostic product to diagnose or assist in decision making to manage an illness during the doctor visit, costs are greatly reduced when compared to sending the patient or biological samples to an analysis laboratory and scheduling a follow up appointment to review the results.
  3. Finally, in this attractive and fast growing area of the health care industry, Trinity Biotech is a minnow among whales. Its innovative products, worldwide marketing reach combined with a U.S. market listing and compliance to U.S. accounting and disclosure rules may eventually make this $75 million market capitalization company an irresistible acquisition target for one of its much larger competitors such as Johnson & Johnson (NYSE:JNJ), Roche Diagnostics (OTCQX:RHHBY) and Siemens Healthcare Diagnostics (SI).

Disclosure: The author currently holds a long position in Trinity Biotech common shares.


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