Mesa Laboratories: Softening Bottom Line Fundamentals, Fairly Priced

Sep. 09, 2022 10:16 AM ETMesa Laboratories, Inc. (MLAB)
Zach Bristow profile picture
Zach Bristow


  • Mesa Laboratories has been compressed heavily on the chart this year to date.
  • The company's bottom-line fundamentals have been weakening on a sequential basis.
  • This isn't backed by the return on the company's invested capital to overcome this and the WACC hurdle.
  • Here I cover these points and recommend MLAB a hold with a $157 price target.

Black female engineer working on industrial machine in a laboratory.

skynesher/E+ via Getty Images

Investment summary

Whilst the market continues to price in a wave of macroeconomic crosscurrents, it is becoming more than just factors of low volatility and 'quality' that are driving equity returns. Investors are looking to bottom-line fundamentals, and shying away from


Note: All figures are in $mm or [%]. All calculations utilize GAAP earnings with no reconciliations. (Image: HB Insights. Data: MLAB SEC Filings)


Note: All figures are in $mm or [%]. Free cash flow calculated as [NOPAT + D - Investments] before dividends. All calculations are GAAP figures with no reconciliations. FCF Yield is calculated as TTM per quarter and as a function of enterprise value at date of earnings release (Image: HB Insights. Data: MLAB SES Filings)


Note: Inventory recorded at end of quarter. All figures are in $mm or times [ 'x' ] for inventory turnover. Market capitalization and enterprise value recorded at end of each respective quarter (Image: HB Insights. Data: MLAB SEC Filings)

This article was written by

Zach Bristow profile picture
Buy side equity strategist conducting a blend of fundamental, technical, long-term analysis across the broad healthcare, commodities and industrials spectrum in developed markets. Helping you position your portfolios for the future is my top priority. Shoot me a message to discuss trade ides or talk portfolio construction. Disclaimer:The opinions expressed in all articles do not constitute as investment advice. Please remember to conduct your own due diligence.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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