GILEAD SCIENCES INC (NASDAQ:GILD) – An Undervalued Biopharmaceutical Stock Worth Considering

GILEAD SCIENCES INC (NASDAQ:GILD) was identified as a decent value stock by our screening process. The company shows strong profitability and reasonable financial health while trading at an attractive valuation. Below, we examine why GILD may appeal to value investors.

Valuation

GILD’s valuation metrics suggest the stock is priced below industry averages:

• P/E Ratio: At 14.17, it is cheaper than 95.69% of its biotechnology peers.
• Forward P/E: 12.72, below the S&P 500 average of 21.76.
• Enterprise Value/EBITDA: Indicates a discount compared to 96.59% of the sector.
• Price/Free Cash Flow: Also favorable, trading lower than 95.51% of competitors.

These metrics suggest GILD is undervalued relative to both its industry and broader market benchmarks.

Profitability

The company maintains strong profitability, with key strengths including:

• Return on Equity (ROE): 31.13%, outperforming 98.03% of industry peers.
• Operating Margin: 38.17%, ranking among the top in the sector.
• Profit Margin: 20.76%, above 95.51% of competitors.

Despite a slight decline in profit margins over recent years, GILD remains highly profitable.

Financial Health

GILD’s financial health is solid but has some areas to monitor:

• Altman-Z Score: 3.81, indicating low bankruptcy risk.
• Debt/FCF Ratio: A manageable 2.53, better than 94.25% of peers.
• Debt/Equity Ratio: 1.16, higher than 77.74% of the industry, suggesting reliance on debt financing.

While liquidity ratios (Current Ratio: 1.37, Quick Ratio: 1.23) are acceptable, they lag behind many competitors.

Growth

Growth is moderate but shows positive trends:

• Recent EPS Growth: Up 77.93% year-over-year.
• Future EPS Growth: Expected to rise by 18% annually.
• Revenue Growth: A modest 4.68% last year, with forecasts suggesting continued but slower expansion.

While past revenue growth has been steady, future projections indicate a deceleration.

Our Decent Value Stocks screener lists more stocks with similar characteristics and is updated daily.
For a deeper dive, review the full fundamental report on GILD.

Disclaimer

This is not investment advice. The observations here are based on current data, but investors should conduct their own research before making decisions.