NOVO-NORDISK A/S-SPONS ADR (NYSE:NVO) - A Strong Candidate for Value Investors

NOVO-NORDISK A/S-SPONS ADR (NYSE:NVO) was identified as a decent value stock by our stock screener. The company combines strong profitability and financial health with reasonable growth and an attractive valuation, making it a potential candidate for value investors.

Key Strengths of NVO

Valuation (Score: 7/10)

• The stock trades at a Price/Earnings (P/E) ratio of 20.39, which is lower than 82.56% of its pharmaceutical industry peers.
• Its Forward P/E of 14.44 suggests a more favorable valuation compared to both the industry and the S&P 500 average.
• The Price/Free Cash Flow and Enterprise Value/EBITDA ratios also indicate that NVO is priced attractively relative to competitors.

Profitability (Score: 9/10)

• NVO boasts an outstanding Return on Equity (ROE) of 75.51%, outperforming nearly 99% of its industry.
• Its Operating Margin of 46.51% and Profit Margin of 34.51% are among the best in the sector.
• The company has consistently generated positive cash flows and profits over the past five years.

Financial Health (Score: 7/10)

• The Altman-Z score of 5.46 indicates low bankruptcy risk.
• A Debt-to-Free Cash Flow ratio of 1.60 suggests manageable debt levels.
• While liquidity ratios (Current and Quick Ratios) are below industry averages, strong solvency metrics mitigate concerns.

Growth (Score: 7/10)

• Revenue grew by 24.11% over the past year, with a five-year average growth rate of 18.94%.
• Earnings Per Share (EPS) increased by 17.96% in the last year, and analysts expect continued growth at 14.29% annually.

Why This Matters for Value Investors

NVO presents a rare combination of strong fundamentals and reasonable valuation. Its high profitability and stable financial health reduce downside risk, while its growth prospects suggest potential upside. The stock’s valuation metrics indicate it may be undervalued relative to its earnings power and industry position.

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

Our Decent Value Stock Screener lists more stocks with similar characteristics and is updated daily.

Disclaimer

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