Stock Analysis: Affordable Growth

Fundamental Rating

Taking everything into account, INCY scores 7 out of 10 in our fundamental rating. INCY was compared to 588 industry peers in the Biotechnology industry. Both the health and profitability get an excellent rating, making INCY a very profitable company, without any liquidiy or solvency issues. INCY is evaluated to be cheap and growing strongly. This does not happen too often! These ratings could make INCY a good candidate for value and growth and quality investing.

1. Profitability

1.1 Basic Checks

In the past year INCY was profitable.

INCY had a positive operating cash flow in the past year.

INCY had positive earnings in 4 of the past 5 years.

Of the past 5 years INCY 4 years had a positive operating cash flow.

1.2 Ratios

INCY has a better Return On Assets (8.81%) than 96.93% of its industry peers.

INCY's Return On Equity of 11.51% is amongst the best of the industry. INCY outperforms 96.59% of its industry peers.

Looking at the Return On Invested Capital, with a value of 8.00%, INCY belongs to the top of the industry, outperforming 96.42% of the companies in the same industry.

Measured over the past 3 years, the Average Return On Invested Capital for INCY is below the industry average of 13.86%.

		Industry Rank	Sector Rank
ROA	8.81%
ROE	11.51%
ROIC	8%

ROA(3y)11.29%

ROA(5y)7.72%

ROE(3y)14.82%

ROE(5y)10.07%

ROIC(3y)9.11%

ROIC(5y)N/A

1.3 Margins

INCY's Profit Margin of 16.17% is amongst the best of the industry. INCY outperforms 97.27% of its industry peers.

In the last couple of years the Profit Margin of INCY has grown nicely.

Looking at the Operating Margin, with a value of 17.64%, INCY belongs to the top of the industry, outperforming 96.93% of the companies in the same industry.

In the last couple of years the Operating Margin of INCY has grown nicely.

The Gross Margin of INCY (93.71%) is better than 95.22% of its industry peers.

INCY's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	17.64%
PM (TTM)	16.17%
GM	93.71%

OM growth 3YN/A

OM growth 5Y16.39%

PM growth 3YN/A

PM growth 5Y22.68%

GM growth 3Y-0.76%

GM growth 5Y-0.51%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), INCY is destroying value.

The number of shares outstanding for INCY has been increased compared to 1 year ago.

The number of shares outstanding for INCY has been increased compared to 5 years ago.

INCY has a better debt/assets ratio than last year.

2.2 Solvency

INCY has an Altman-Z score of 5.99. This indicates that INCY is financially healthy and has little risk of bankruptcy at the moment.

With an excellent Altman-Z score value of 5.99, INCY belongs to the best of the industry, outperforming 81.57% of the companies in the same industry.

INCY has a debt to FCF ratio of 0.07. This is a very positive value and a sign of high solvency as it would only need 0.07 years to pay back of all of its debts.

INCY has a better Debt to FCF ratio (0.07) than 97.61% of its industry peers.

INCY has a Debt/Equity ratio of 0.01. This is a healthy value indicating a solid balance between debt and equity.

With a Debt to Equity ratio value of 0.01, INCY perfoms like the industry average, outperforming 47.10% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.01
Debt/FCF	0.07
Altman-Z	5.99

ROIC/WACC0.87

WACC9.2%

2.3 Liquidity

A Current Ratio of 3.75 indicates that INCY has no problem at all paying its short term obligations.

INCY has a Current ratio (3.75) which is comparable to the rest of the industry.

INCY has a Quick Ratio of 3.69. This indicates that INCY is financially healthy and has no problem in meeting its short term obligations.

With a Quick ratio value of 3.69, INCY perfoms like the industry average, outperforming 42.83% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	3.75
Quick Ratio	3.69

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

INCY shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 26.62%, which is quite impressive.

Measured over the past years, INCY shows a very strong growth in Earnings Per Share. The EPS has been growing by 27.86% on average per year.

Looking at the last year, INCY shows a quite strong growth in Revenue. The Revenue has grown by 8.87% in the last year.

INCY shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.45% yearly.

EPS 1Y (TTM)26.62%

EPS 3YN/A

EPS 5Y27.86%

EPS growth Q2Q70.97%

Revenue 1Y (TTM)8.87%

Revenue growth 3Y11.49%

Revenue growth 5Y14.45%

Revenue growth Q2Q9.35%

3.2 Future

Based on estimates for the next years, INCY will show a quite strong growth in Earnings Per Share. The EPS will grow by 18.66% on average per year.

The Revenue is expected to grow by 8.13% on average over the next years. This is quite good.

EPS Next Y31.69%

EPS Next 2Y24.97%

EPS Next 3Y24.94%

EPS Next 5Y18.67%

Revenue Next Year12.46%

Revenue Next 2Y11.59%

Revenue Next 3Y11.38%

Revenue Next 5Y8.13%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 15.27, INCY is valued correctly.

Based on the Price/Earnings ratio, INCY is valued cheaper than 97.10% of the companies in the same industry.

The average S&P500 Price/Earnings ratio is at 28.28. INCY is valued slightly cheaper when compared to this.

INCY is valuated reasonably with a Price/Forward Earnings ratio of 11.60.

INCY's Price/Forward Earnings ratio is rather cheap when compared to the industry. INCY is cheaper than 98.29% of the companies in the same industry.

Compared to an average S&P500 Price/Forward Earnings ratio of 20.88, INCY is valued a bit cheaper.

		Industry Rank	Sector Rank
PE	15.27
Fwd PE	11.6

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of INCY indicates a rather cheap valuation: INCY is cheaper than 97.95% of the companies listed in the same industry.

Compared to the rest of the industry, the Price/Free Cash Flow ratio of INCY indicates a rather cheap valuation: INCY is cheaper than 96.25% of the companies listed in the same industry.