Guardant Health, Inc. (GH) Stock Analysis
Guardant Health, Inc. (GH) Stock Analysis
Overall Grade: F (Concerning)
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Guardant Health, Inc. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 43.6% | Above industry average |
| FCF Margin | -32.8% | Cash flow pressure |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 43.6% suggests durable competitive advantages and efficient capital allocation.
What is Guardant Health, Inc.'s Profitability and ROIC?
Guardant Health, Inc. generates strong returns on invested capital at 43.6%, indicating efficient capital allocation and competitive advantages. Gross margin of 100.0% with operating margin at -55.6% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 43.6% | Excellent | Strong capital efficiency |
| Return on Equity (ROE) | 274.0% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 100.0% | Excellent | Strong pricing power |
| Operating Margin | -55.6% | Warning | Moderate operational efficiency |
How Strong is Guardant Health, Inc.'s Cash Flow Quality?
Guardant Health, Inc. generated $-271.7M in free cash flow over the trailing twelve months, representing a -32.8% margin. FCF was positive in N/A of the last 8 quarters, indicating variable cash generation.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | -32.8% | Red flag | Thin cash margins |
| Free Cash Flow (TTM) | $-271.7M | Red flag | Cash burn |
| OCF/Net Income | 0.6x | Adequate | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is Guardant Health, Inc.'s Financial Health?
Guardant Health, Inc.'s debt-to-equity ratio of 0.0x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Is Guardant Health, Inc. Stock Overvalued or Undervalued?
Guardant Health, Inc. trades at a P/E of -15.5x, representing a premium to the sector median of N/A.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | -15.5x | Red flag | Reasonable valuation |
| EV/Sales | 4.0x | Good | Growth premium priced in |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 43.6% | Top 5% | - |
| Free Cash Flow Margin | -32.8% | Bottom 10% | - |
| Gross Margin | 100.0% | Top 25% | 1.6x above |
| Operating Margin | -55.6% | Top 25% | -12.4x below |
| Return on Equity (ROE) | 274.0% | Top 5% | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 43.6% (Excellent - Top 5% of sector (median: 0.0%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: -32.8% (Red flag)
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 100.0% (Excellent - Top 25% of sector (median: 61.4%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 0.0% (Excellent)
Frequently Asked Questions
Q: What is Guardant Health, Inc.'s Return on Invested Capital (ROIC)?
Guardant Health, Inc. (GH) has a trailing twelve-month Return on Invested Capital (ROIC) of 43.6%. This compares above the sector median of 0.0%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is Guardant Health, Inc.'s Free Cash Flow Margin?
Guardant Health, Inc. (GH) has a free cash flow margin of -32.8%, generating $-271.7 million in free cash flow over the trailing twelve months. Negative free cash flow means the company is consuming cash, which may require financing.
Q: Is Guardant Health, Inc. stock overvalued or undervalued?
Guardant Health, Inc. (GH) trades at a P/E ratio of -15.5x, which is above the sector median of N/A. The EV/Sales multiple is 4.0x.
Q: How does Guardant Health, Inc. compare to competitors in Healthcare?
Compared to other companies in Healthcare, Guardant Health, Inc. (GH) shows: ROIC of 43.6% is above the sector median of 0.0% (Top 3%). FCF margin of -32.8% trails the sector median of 0.0%. Gross margin at 100.0% is 38.6 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Healthcare companies with available SEC filings.
Q: What warning signs should I watch for with Guardant Health, Inc.?
Investors in Guardant Health, Inc. (GH) should monitor these potential warning signs: 1) FCF margin is thin at -32.8%, leaving limited buffer for economic downturns. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-29. TTM metrics as of Q2 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.