BRISTOL-MYERS SQUIBB CO (NYSE:BMY) – A Potentially Undervalued Stock Worth Considering

BRISTOL-MYERS SQUIBB CO (NYSE:BMY) was identified by our stock screener as a decent value candidate. The company shows strong profitability and an attractive valuation, while maintaining reasonable financial health and growth prospects. Below, we examine why BMY may appeal to value investors.

Valuation Highlights

• BMY has a Price/Earnings (P/E) ratio of 6.33, significantly lower than both the industry average (19.63) and the S&P500 average (24.21).
• The Forward P/E of 7.53 suggests the stock remains cheap relative to future earnings expectations.
• The company’s Enterprise Value to EBITDA and Price/Free Cash Flow ratios are better than 91% and 93% of industry peers, respectively.
• Despite a high payout ratio (90.59%), BMY offers a dividend yield of 5.29%, well above the industry and S&P500 averages.

Profitability Strengths

• Return on Equity (ROE) of 31.16% outperforms 95% of pharmaceutical peers.
• Operating Margin of 27.11% ranks in the top 9% of the industry.
• Gross Margin remains strong at 74.69%, indicating pricing power and cost efficiency.

Financial Health Considerations

• The company maintains a Debt-to-FCF ratio of 3.80, suggesting manageable debt levels relative to cash flow.
• However, a Debt-to-Equity ratio of 2.67 is higher than 77% of industry peers, indicating reliance on debt financing.
• Liquidity metrics (Current Ratio: 1.28, Quick Ratio: 1.17) are adequate but below industry averages.

Growth Outlook

• While past EPS growth has been volatile, future EPS is expected to grow by 38.96% annually.
• Revenue growth has averaged 13.06% over recent years, though a slight decline (-4.38%) is projected in the near term.

For a deeper look, review the full fundamental analysis report for BMY.

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Disclaimer

This is not investment advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.