You may have heard about PG&E's removal from the S&P 500, and its replacement by a company that goes by the name of Teleflex (TFX). It's a stock that you might want to consider investing in if you're looking for a newcomer to the index in the medical supply industry. The large utility PG&E came out on the losing side of the stock market and they took such a dive in share price that they slid right off of the index. Their recent spiral into bankruptcy has taken them off of the radar for serious investors. Teleflex was waiting in the wings and assumed PCG's previous slot on the market. Here is the information that you need to know about the most recent addition to the S&P 500.
What is Teleflex?
Teleflex is now listed on the NYSE:TFX as its ticker name. If you haven't heard about it yet, don't feel bad because it's a brand new player in the game. Teleflex is a company that makes medical devices. They manufacture and distribute a variety of products through a catalog that offers a large assortment of the things that physicians and nurses require when performing medical procedures. Teleflex offers products under their umbrella in eight different brand names which include Arrow, Deknatel, Hudson RCI, LMA, Pilling, Rusch, Urolift and Weck.
The company started out as an engineering company. Not long after its beginning, they turned their focus on the development and manufacture of medical devices. Teleflex is a North American enterprise with a global presence and the majority of their business taking place in the North American market to the tune of about 40% for revenue generation in their 2019 Q3.
They're wheelers and dealers
Teleflex has been stable in wise and effective decision making for expansion of their operations. They evolved into the manufacture and distribution of medical devices through the acquisition of the right companies and they've also made the appropriate divestments for their new trajectory. This track record of good decision making and even better bottom line results has raised confidence in the company. Their most recent purchases include a vascular closure device called Manta manufacturer, Essential Medical, and QT Vascular which makes coronary balloon catheters. The acquisition of these two companies spurred a rapid growth in the Teleflex company and the increase in the total net revenue for 2018's Q3 was an impressive $74 million, representing a 14% growth rate. The breakdown revealed that approximately $25 million of this revenue was from increases in sales volume and the rest from the assets Teleflex purchased in the acquisition deals.
An excellent profit
Teleflex has maintained a decent record of bottom line profit since 2011 and almost every year of operation has reflected revenue growth. It's performed steadily with a good measure of reliability. The only real area of concern that analysts discovered is the Teleflex debt scenario. The long term debt they acquired through their numerous mergers and other overhead expenses is almost $2.1 billion. This is nearly, but not quite equal to its annual revenue and this is an aspect of the company that bears watching, to see how well the debt is managed, but it's not a deal breaker when it comes to deciding whether or not to invest in the stock.
The forecast for Teleflex
Looking to the future of Teleflex we understand that they're in a business that provides products that are in high demand. With the aging population, the demand for the goods they manufacture and distribute is not likely to decrease and there's a good chance that they demand will increase. This is if there are no complications with the effectiveness or quality of the products, no major lawsuits over failure, and a steady rule of product development and innovation is adhered to within these medical manufacturing companies. These are key concerns that any investor should consider when weighing options for long term investment strategies. In short, it looks like a good bet, but there are so many variables to consider that you're always taking some degree of risk when investing in medical device manufacturing companies. In recent history, Teleflex has seen growth that is encouraging with a 13.5% improvement in revenue for 2018. It's predicted that they will experience a growth of 12% with an improvement of 6% in revenue for the upcoming 2019 year.
Written by Garrett Parker
Read more posts by Garrett Parker