How Cheap is This Growth Stock?

We’re not sure about you, but for us, a doctor’s visit can be a painful experience. The waiting time can seem like forever, just cancel your plans, because you never know when you’ll actually get a chance to see the doctor. 

Telemedicine offers a solution to this problem.

Of course, it became more in demand during the pandemic. And one of the true stars to emerge from space was Teladoc Health (TDOC).

Consistently the top Health Information Services stock search amongst financial pros, its #1 status hasn’t been challenged in the better part of a year.

Traders and investors wonder whether Teladoc can turn a profit (it’s cash flow positive) given the heavy competition.

But with shares down more than 78% from their highs, we have to ask how cheap is this growth stock?

This Industry Could Create The World’s First Trillionaire (Sponsored)

Amazon Could Fail One Day. Here’s The Stock Pick We Think Investors Need For When That Happens. 

Find out now what stock we’re talking about

Teladoc Health (TDOC) Business

Teladoc Health  (TDOC) is a global leader in virtual healthcare. Its technology allows people to connect with healthcare professionals wherever they are through the internet 

In 2020 the company had 10.6 million medical visits delivered. And in 2021, those numbers jumped to 18M virtual visits.  

TDOC serves employers, health plans, hospitals and health systems, and of course, individuals. 

Clinicians can utilize TDOC software, solutions, and telehealth devices. 

It offers telehealth, access to mental health professionals, and primary and complex care. 

TDOC offers its products and services under Teladoc, Livongo, Advance Medical, Best Doctors, Better Help, and HealthiestYou brands. 

Major insurers became comfortable with Telehealth services during the pandemic and have since become more open to accepting them.

However, interstate healthcare laws typically prohibit doctors from treating patients in other states at the moment.

Financials

One of the winners of the pandemic has been Teladoc. The firm’s revenue jumped from $418M in 2018 to $2B in 2021.  

One thing that really pops out is the firm’s gross margin. It nearly doubled its revenues from 2020 to 2021, and it increased its gross margin!

In other words, TDOC has proven its business model is scalable. 

TDOC has a current ratio of 3.7. That means its assets are 3.7 times greater than its short-term liabilities. 

Moreover, TDOC has a quick ratio of 3.22. That means its highly liquid assets are 3.2 times greater than its short-term liabilities. 

Despite the lack of earnings, TDOC generates positive operational and free cash flow (cash flow after capital expenditures). That was a major milestone this past year.

Valuation

TDOC isn’t profitable yet, however, from a valuation perspective, it does have some positives.

The company has a price to sales ratio of 5.31. That is actually a very strong statline considering the firm’s market cap is just 5.3X the company’s sales.

Plus, the price to forward cash flow drops from 57x to 37x while the forward price to sales drops to 4.12x

At a gross profit margin of 68%, it’s safe to say TDOC runs a smooth business. Furthermore, the company generated nearly $200M Cash from operations. 

Our Opinion – 7/10

TDOC shares are down 78% from the 52-week highs, and are underperforming the broader market in 2022. 

And while the stock price hasn’t been moving in the right direction for months, we do like the stock from a risk to reward standpoint. 

TDOC has proven its business model is scalable, and that there is plenty of growth opportunity in the space. 

TDOC is a volatile stock and requires its investors to have a strong stomach and a high threshold for pain. If you’re someone who can take the swings, then we encourage you to do your own research. 

We like the stock here for the next 12-24 months.