Ginkgo Bioworks

Ginkgo Bioworks Holdings Inc is assigned a 4-star quantitative star rating, illustrating our stance that this share class offers a somewhat attractive opportunity for investors. The stock currently trades at a 43% discount to our quantitative fair value estimate of $20.28 per share; however, caution is warranted due to this estimate's very high uncertainty rating.

The firm's balance sheet increases our estimated valuation. Low leverage mitigates financial risk, potentially boosting a firm's value. For example, the firm's current ratio of 4.6 falls in the top 20% compared with peers globally. We have little concern about this company's ability to cover near-term obligations, thanks to its relatively high current ratio; this could be a compelling signal during times of distress, which contributes to our view that shares are cheap.

Conversely, the company's lack of profitability is potentially concerning. Companies with low profitability are often less resilient in recessions and are likely to generate weaker future cash flows for shareholders. The firm's sales yield of 15.5%, a core component of profitability, lies in the bottom 20% compared with global peers. This company's inability to generate significant sales growth without meaningful capital investment is a challenge, which, despite our favorable price/fair value ratio, is a negative attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has been a laggard relative to the broader universe over the past year. This underperformance makes the stock appear cheap, which portends a buying opportunity in light of other contributors to our model.

With its quantitative economic moat rating of none, we do not expect this company to materially outearn its cost of capital in the long run. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.