Bruker has been on fire lately. In the past six months alone, the company’s stock price has rocketed 50.7%, reaching $58.84 per share. This run-up might have investors contemplating their next move.
Is now the time to buy Bruker, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Is Bruker Not Exciting?
We’re happy investors have made money, but we’re passing on Bruker for now. Here are three reasons we avoid BRKR, plus one stock we’d rather own.
1. Core Business Falling Behind as Demand Declines
We can better understand Research Tools & Consumables companies by analyzing their organic revenue. This metric gives visibility into Bruker’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Bruker’s organic revenue averaged 1% year-on-year declines. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Bruker might have to lean into acquisitions to grow, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus). 
2. EPS Growth Has Stalled
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Bruker’s flat EPS over the last five years was below its 9.1% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
3. New Investments Fail to Bear Fruit as ROIC Declines
We like to invest in businesses with high returns, but the trend in a company’s ROIC can also be an early indicator of future business quality.
Over the last few years, Bruker’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
Bruker’s business quality ultimately falls short of our standards. Following the recent surge, the stock trades at 25.8× forward P/E (or $58.84 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We’re pretty confident there are more exciting stocks to buy at the moment. We’d recommend looking at a safe-and-steady industrials business benefiting from an upgrade cycle.
Stocks We Would Buy Instead of Bruker
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