Probiotec (ASX:PBP) was founded in 1997 by the Stringer family. It is a contract manufacturing and packing company with clients across the categories of:
Prescription and Over the Counter Pharmaceuticals
Vitamins and supplements
Veterinary products
Cosmetics
Food and beverage
Pet foods and ingredients
They have a diverse client base of over 200, including many large multinationals and household names. These include pharmaceutical companies like Pfizer, GSK, Sanofi and Johnson n Johnson, vitamin firms Blackmores and Swisse, food companies such as Kellogs, Mars and Unilever, cosmetics from L’Oreal Paris and many other well known brands. They distribute these products both domestically and internationally on behalf of their clients.
The company has grown strongly and now boasts revenue of around $200 million. They listed in 2006 and initially the share price ran to $2.50 in 2010. It then collapsed and they spent many years in the doldrums, with the share price falling below 20c but started to rise again in 2015 and have been in an upward trend ever since.
Over the last five years, revenue has been growing at a CAGR of 25%p.a.. EPS has slightly outpaced this at 27% p.a.. They have benefited from the trend towards onshoring and the push from global firms to ‘make where you sell.’ Supply chain logistics as well as cross border risks came to the forefront during the pandemic with inventory management becoming a big issue. To quote the CEO of PWR Holdings, “I’d rather be looking at it than looking for it.”
Last week I wrote an article on PWR Holdings (ASX:PWH) where I analysed how it met the criteria for a Compounding Quality Screen. Probiotec has also demonstrated compounding growth and has a Quality score of 95, but it does not make the screen.
Stockopedia gives you the ability to Run a stock through a checklist and see exactly why it doesn’t make a particular screen. Under Tools, select “Run through a checklist” and choose the screen of interest.
You can see in the screenshot below that Probiotec only meets 7 of the 15 rules for the Compounding Quality screen. For each rule missed, we can expand on it to see exactly why it missed out.
The biggest weakness for PBP has been its long…
