NOVARTIS AG-SPONSORED ADR (NYSE:NVS) stands out as a potential value opportunity, identified by our fundamental screening process. The company combines strong profitability and financial health with an attractive valuation, making it worth a closer look for investors seeking undervalued stocks in the healthcare sector.
Valuation
NOVARTIS scores a 7/10 in valuation, indicating it trades at a reasonable price relative to its fundamentals. Key points include:
- A P/E ratio of 13.93, below the industry average of 19.95 and the S&P 500 average of 26.34.
- 86.7% of pharmaceutical peers are more expensive based on P/E.
- The forward P/E of 12.75 suggests continued value.
- Strong free cash flow generation supports the case for undervaluation.
Profitability
With a 9/10 profitability rating, NOVARTIS excels in earnings efficiency:
- Return on Equity (ROE) of 33.5%, outperforming 96.4% of industry peers.
- Operating margin of 32.8%, ranking in the top 5% of the sector.
- Consistent earnings growth, with EPS rising 18.6% in the past year.
Financial Health
The company maintains a solid 7/10 health rating, supported by:
- A manageable debt-to-equity ratio of 0.61, though slightly higher than some peers.
- Strong Altman-Z score of 3.79, indicating low bankruptcy risk.
- Debt is well-covered by free cash flow, with a favorable debt/FCF ratio of 2.1.
Growth
While growth is moderate (5/10), NOVARTIS shows stability:
- Revenue grew 11.6% in the past year, with a 3.4% expected annual growth ahead.
- EPS growth is projected at 6.5% annually, supported by cost efficiencies.
Our Decent Value screener lists more stocks with similar characteristics.
For a deeper dive, review the full fundamental report on NOVARTIS.
Disclaimer
This is not investment advice. Always conduct your own research before making investment decisions.
