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Spotlight on: Rochester Medical (ROCM)

  +Follow January 9, 2014 10:42AM
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At the beginning of 2013 Equities.com began tracking a group of small-cap stocks called the Small-Cap Stars. Utilizing a series of sector-specific criteria, the research team identified 524 plays that qualified for inclusion.

The stocks included had to meet at least one out of five criteria specific to their sector. Out of the 542, there were a handful that only hit one benchmark, or two, but all five. Today we’re taking a look at the only small-cap play in the Healthcare sector that did so: Rochester Medical (ROCM) .

Background on Rochester Medical (ROCM)

Headquartered just south of Rochester, MN in the city of Stewartville, Rochester Medical manufactured and designed catheters. Founded in 1988, the company went public in 1991. Two years later the company launched its first Rochester brand products, and topped sales of $1 million.

Since then the company grew slowly yet steadily to be eventually valued at $247.19 million. In September, the company agreed to be acquired by CR Bard Inc. (CBR) for $20 a share, a 45 percent premium on their prior valuation.

The day's subsequent gap meant that by year’s close, Rochester had risen over 75 percent in value.

A Retrospective

As Rochester was acquired during its tracking, it might not seem to be worth looking at closely. However, a look into what made Rochester such a strong healthcare play can explain why it received such a high valuation in its buyout.

Here is the criteria Equities.com uses for evaluating small-cap healthcare stocks:

EV/EBITDA: The inclusion of EBITDA as opposed to EBIT or EBT shows that measures of interest expense, taxes, and dep/amort are all important to healthcare companies. Healthcare is an industry that places a premium on high valuations, so it makes sense that the companies with higher initial valuations would perform better.

Value/Book Value of Capital: The relationship here for healthcare companies is establishing what the book value is compared to the market value. As opposed to financials, for healthcare this works as a valuation metric of its balance sheet assets compared to its market value. A higher ratio implies higher valuation which we’ve established to be good.

FCFF (Negative): Free cash flow to the firm is the amount of cash left over after all expenses are covered. A high metric is good for many industries, but for healthcare, which is an industry that requires constant innovation, it is considered to be a sign that the company is not adequately investing, proof of this is shown in our next category.

Capital Expenditures: Higher capital expenditures means that company is spending more to develop and grow its business, in the healthcare industry this is extremely important.

Intangible Assets/Total Assets: This is perhaps the least surprising metric for healthcare. Healthcare is an industry that is dependent on its patents, which are included in intangible assets, so a higher ratio would indicate that the company has a strong future.

Rochester met four out of five of the criteria, only falling short in the Value/Book Value category. Bard no doubt was aware of the company’s strong fundamentals when they snatched up Rochester. For out of every small-cap on the market, they truly stood out.

Results for ROCM
The Amazing Seven
19 Apr 14 12:15:42
$ROCM Rochester Medical acqu http://t.co/gFpS1Lsjd7
Adria Mosley
19 Apr 14 04:51:37
$ROCM Rochester Medical acqu http://t.co/QIznPlDGNK
Thurman Holm
19 Apr 14 02:40:44
$ROCM Rochester Medical acqu http://t.co/B0ucsQt9S3
iHugo Albert
19 Apr 14 00:03:03
$ROCM TODD HALE: Remembering the wreck of the Twin Star Rocket http://t.co/kGtnJ7f6jl
iHugo Albert
18 Apr 14 22:40:05
$ROCM Cornerstone to help Bayer's bee problem — Hack retires from GD, sticks around ... http://t.co/89EEEcPrpJ
iHugo Albert
18 Apr 14 14:57:38
$ROCM Cornerstone to help Bayer's bee problem — Hack retires from GD, sticks around ... http://t.co/fQZPu3wUFX
iHugo Albert
18 Apr 14 12:22:13
$ROCM Cornerstone to help Bayer's bees http://t.co/cGDxjKbUmL
Louie O'Malley
18 Apr 14 02:32:08
$ROCM Rochester Medical acqu http://t.co/nDXT8iOEZC
Sky Grady
17 Apr 14 13:55:52
$ROCM Rochester Medical acqu http://t.co/C4ThNqM0Ts
Keon Carlisle
17 Apr 14 10:14:32
$ROCM Rochester Medical acqu http://t.co/9euFg4ERGr
iHugo Albert
17 Apr 14 10:06:03
$ROCM Penny Stocks on the Move – Triton Distribution Systems, (OTC: TTDZ), TITAN ... http://t.co/bHXgukmxDw
Boaz Boulstridge
17 Apr 14 09:30:41
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/jcCEblg0a6
Major Brown
17 Apr 14 08:13:17
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/R1IoLe8WUZ
Silvana Orozco
17 Apr 14 02:06:08
$ROCM Rochester Medical acqu http://t.co/VzvgYq56f6
iHugo Albert
17 Apr 14 00:27:05
$ROCM Nasdaq stocks posting largest percentage increases http://t.co/1WU2jA4G4u
iHugo Albert
17 Apr 14 00:21:36
$ROCM Nasdaq stocks posting largest volume increases http://t.co/IbfgwQyOBb
Pike Gall
16 Apr 14 16:00:08
$ROCM Rochester Medical acqu http://t.co/qTsgLFgONe
Mind Equity
16 Apr 14 13:58:33
$ROCM Rochester Medical acqu http://t.co/AX2wAgW4Nc
Kermit Bailey
16 Apr 14 12:07:05
$ROCM Rochester Medical acqu http://t.co/wNd0IM3TB0
Alfred Jaxon
16 Apr 14 07:42:50
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/UJgtp8hFJV
Mariano Keifer
16 Apr 14 06:04:18
$ROCM Rochester Medical acqu http://t.co/sD7jVW7BAR
Lars Kingston
16 Apr 14 06:01:19
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/k9iZrJ2PNe
Lutz Braune
16 Apr 14 01:37:04
$ROCM Onondaga County judgments: March 31 to April 4 http://t.co/6TODyKYrE4
Lutz Braune
15 Apr 14 22:53:05
$ROCM Nasdaq stocks posting largest percentage increases http://t.co/Yhae4cq6eJ
Lutz Braune
15 Apr 14 16:09:17
$ROCM Nasdaq stocks posting largest percentage increases http://t.co/Yhae4cq6eJ
Enoch Cohen
15 Apr 14 15:00:53
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/mU6zIAZnox
Lutz Braune
15 Apr 14 13:23:06
$ROCM Onondaga County judgments: March 31 to April 4 http://t.co/6TODyKYrE4
Dmitri Magnuson
15 Apr 14 12:52:36
$ROCM Rochester Medical acqu http://t.co/kSMQOGuZq9
Boaz Boulstridge
15 Apr 14 09:09:12
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/lcgFMnOsR2
Lutz Braune
14 Apr 14 22:03:12
$ROCM 2014 Vanden Brul Entrepreneurial Award recipients http://t.co/XnzVHwl24l
Brice Latimer
14 Apr 14 20:29:02
$ROCM Rochester Medical acqu http://t.co/vtL5pXKLn9
Marius Jackson
14 Apr 14 14:18:20
$ROCM Rochester Medical acqu http://t.co/8d3KudiZUi
Gary Rosovsky
14 Apr 14 12:22:25
$ROCM Rochester Medical acqu http://t.co/Q4AccHomoW
Gold Stock News
14 Apr 14 03:43:43
$ROCM Rochester Medical acqu http://t.co/6C5AA497Jl
Constantine Greyson
13 Apr 14 19:09:29
$ROCM Rochester Medical acqu http://t.co/Gr6D0EU5fX
Pearline Smiley
13 Apr 14 16:50:03
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/5dd5swF4Dw
Crew Daily
13 Apr 14 16:30:49
$ROCM Rochester Medical acqu http://t.co/l1bjTBzipI
Franco Gall
13 Apr 14 11:05:05
$ROCM Rochester Medical acqu http://t.co/epjYJNQnOu
Fausto Tilley
13 Apr 14 08:06:52
$ROCM ROCHESTER MEDICAL CORPORATION Files SEC form 8-K, Completion o http://t.co/2dPpltZOup
Ignacio Johnson
13 Apr 14 05:13:17
$ROCM Rochester Medical acqu http://t.co/jJolbQyq5T
Crew Gretzky
11 Apr 14 19:47:27
$ROCM Rochester Medical acqu http://t.co/CH1dao9z0n
Brenden Black
11 Apr 14 10:41:56
$ROCM Rochester Medical acqu http://t.co/xZXyKgUpYB
				
				
  +Follow January 9, 2014 10:42AM
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