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

BRISTOL-MYERS SQUIBB CO (NYSE:BMY) was identified as a decent value stock by our screening process. The company combines an attractive valuation with solid profitability and a strong dividend yield, making it a candidate for value investors. Below, we examine why BMY stands out based on its fundamentals.

Valuation

BMY’s valuation metrics suggest the stock is trading at a discount:

• P/E Ratio: At 6.58, BMY’s P/E is significantly lower than both the industry average (19.98) and the S&P 500 (26.25).
• Forward P/E: 7.80, which remains well below the sector and broader market.
• Price/Free Cash Flow: The stock is cheaper than 94.9% of its pharmaceutical peers.
• PEG Ratio: Indicates the stock is reasonably priced relative to expected earnings growth.

Profitability

The company maintains strong profitability metrics:

• Return on Equity (ROE): 31.16%, outperforming 95% of industry peers.
• Operating Margin: 27.11%, better than 91.9% of competitors.
• Gross Margin: A healthy 74.7%, ranking above 82.7% of the sector.

Financial Health

While BMY has some debt concerns, its overall financial health is stable:

• Debt/Equity Ratio: 2.67 is high, but manageable given cash flows.
• Debt/FCF Ratio: 3.80, meaning it could pay off debt in under four years using free cash flow.
• Altman-Z Score: 2.09, indicating limited near-term bankruptcy risk.

Growth & Dividend

• Earnings Growth: EPS surged 599% YoY, though long-term averages show volatility.
• Revenue Growth: 4.6% YoY, with a 13.1% 5-year CAGR.
• Dividend Yield: 5.28%, well above the industry (4.2%) and S&P 500 (2.4%).
• Dividend Growth: An 11.7% annual increase over recent years.

Our Decent Value screener lists more stocks with strong valuations and fundamentals.
For a deeper look, review the full fundamental report on BMY.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.