Affordable Growth. Analyze the stocks which are showing good growth, decent profitability and health and are not overvalued from a fundamental perspective.


NOVO-NORDISK A/S-SPONS ADR

New York Stock Exchange, Inc. / Health Care / Pharmaceuticals

Fundamental Rating

8

NVO gets a fundamental rating of 8 out of 10. The analysis compared the fundamentals against 198 industry peers in the Pharmaceuticals industry. Both the health and profitability get an excellent rating, making NVO a very profitable company, without any liquidiy or solvency issues. An interesting combination arises when we look at growth and value: NVO is growing strongly while it also seems undervalued. This makes NVO very considerable for value and growth and quality investing!


Dividend Valuation Growth Profitability Health

9

1. Profitability

1.1 Basic Checks

NVO had positive earnings in the past year.
In the past year NVO had a positive cash flow from operations.
Each year in the past 5 years NVO has been profitable.
NVO had a positive operating cash flow in each of the past 5 years.
NVO Yearly Net Income VS EBIT VS OCF VS FCFNVO Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B 100B

1.2 Ratios

NVO's Return On Assets of 21.68% is amongst the best of the industry. NVO outperforms 98.48% of its industry peers.
With an excellent Return On Equity value of 70.38%, NVO belongs to the best of the industry, outperforming 98.48% of the companies in the same industry.
NVO has a better Return On Invested Capital (43.02%) than 97.98% of its industry peers.
NVO had an Average Return On Invested Capital over the past 3 years of 50.29%. This is significantly above the industry average of 41.67%.
The last Return On Invested Capital (43.02%) for NVO is well below the 3 year average (50.29%), which needs to be investigated, but indicates that NVO had better years and this may not be a problem.
Industry RankSector Rank
ROA 21.68%
ROE 70.38%
ROIC 43.02%
ROA(3y)23.77%
ROA(5y)24.99%
ROE(3y)71.81%
ROE(5y)69.89%
ROIC(3y)50.29%
ROIC(5y)49.64%
NVO Yearly ROA, ROE, ROICNVO Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60 80

1.3 Margins

Looking at the Profit Margin, with a value of 34.78%, NVO belongs to the top of the industry, outperforming 96.97% of the companies in the same industry.
In the last couple of years the Profit Margin of NVO has grown nicely.
NVO's Operating Margin of 46.16% is amongst the best of the industry. NVO outperforms 97.47% of its industry peers.
NVO's Operating Margin has improved in the last couple of years.
NVO has a better Gross Margin (84.67%) than 88.89% of its industry peers.
NVO's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 46.16%
PM (TTM) 34.78%
GM 84.67%
OM growth 3Y4.3%
OM growth 5Y1.69%
PM growth 3Y0.84%
PM growth 5Y1.73%
GM growth 3Y0.72%
GM growth 5Y0.24%
NVO Yearly Profit, Operating, Gross MarginsNVO Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60 80

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7

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so NVO is creating value.
Compared to 1 year ago, NVO has less shares outstanding
NVO has more shares outstanding than it did 5 years ago.
NVO has a worse debt/assets ratio than last year.
NVO Yearly Shares OutstandingNVO Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B
NVO Yearly Total Debt VS Total AssetsNVO Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100B 200B 300B 400B

2.2 Solvency

NVO has an Altman-Z score of 5.62. This indicates that NVO is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.62, NVO belongs to the top of the industry, outperforming 84.34% of the companies in the same industry.
The Debt to FCF ratio of NVO is 1.48, which is an excellent value as it means it would take NVO, only 1.48 years of fcf income to pay off all of its debts.
NVO has a Debt to FCF ratio of 1.48. This is amongst the best in the industry. NVO outperforms 93.94% of its industry peers.
A Debt/Equity ratio of 0.62 indicates that NVO is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.62, NVO is not doing good in the industry: 63.13% of the companies in the same industry are doing better.
Although NVO does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
Industry RankSector Rank
Debt/Equity 0.62
Debt/FCF 1.48
Altman-Z 5.62
ROIC/WACC6.23
WACC6.9%
NVO Yearly LT Debt VS Equity VS FCFNVO Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B

2.3 Liquidity

A Current Ratio of 0.74 indicates that NVO may have some problems paying its short term obligations.
NVO has a Current ratio of 0.74. This is amonst the worse of the industry: NVO underperforms 88.38% of its industry peers.
NVO has a Quick Ratio of 0.74. This is a bad value and indicates that NVO is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of NVO (0.55) is worse than 89.39% of its industry peers.
NVO does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
Industry RankSector Rank
Current Ratio 0.74
Quick Ratio 0.55
NVO Yearly Current Assets VS Current LiabilitesNVO Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B 150B 200B

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7

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 21.57% over the past year.
The Earnings Per Share has been growing slightly by 6.68% on average over the past years.
Looking at the last year, NVO shows a very strong growth in Revenue. The Revenue has grown by 25.03%.
Measured over the past years, NVO shows a quite strong growth in Revenue. The Revenue has been growing by 18.94% on average per year.
EPS 1Y (TTM)21.57%
EPS 3Y2.95%
EPS 5Y6.68%
EPS Q2Q%29.12%
Revenue 1Y (TTM)25.03%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%30.09%

3.2 Future

Based on estimates for the next years, NVO will show a quite strong growth in Earnings Per Share. The EPS will grow by 13.97% on average per year.
Based on estimates for the next years, NVO will show a quite strong growth in Revenue. The Revenue will grow by 12.68% on average per year.
EPS Next Y19.72%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
EPS Next 5Y13.97%
Revenue Next Year21.03%
Revenue Next 2Y18.54%
Revenue Next 3Y15.89%
Revenue Next 5Y12.68%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
NVO Yearly Revenue VS EstimatesNVO Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 100B 200B 300B 400B 500B
NVO Yearly EPS VS EstimatesNVO Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 10 20 30 40 50

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7

4. Valuation

4.1 Price/Earnings Ratio

NVO is valuated rather expensively with a Price/Earnings ratio of 20.07.
NVO's Price/Earnings ratio is rather cheap when compared to the industry. NVO is cheaper than 82.83% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.22, NVO is valued a bit cheaper.
The Price/Forward Earnings ratio is 16.76, which indicates a correct valuation of NVO.
Compared to the rest of the industry, the Price/Forward Earnings ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 82.83% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.86. NVO is around the same levels.
Industry RankSector Rank
PE 20.07
Fwd PE 16.76
NVO Price Earnings VS Forward Price EarningsNVO Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, NVO is valued cheaply inside the industry as 81.31% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 80.81% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 29.02
EV/EBITDA 13.63
NVO Per share dataNVO EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6 8

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
NVO has an outstanding profitability rating, which may justify a higher PE ratio.
NVO's earnings are expected to grow with 18.20% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.02
PEG (5Y)3
EPS Next 2Y21.13%
EPS Next 3Y18.2%

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6

5. Dividend

5.1 Amount

NVO has a Yearly Dividend Yield of 2.57%.
Compared to an average industry Dividend Yield of 4.20, NVO pays a better dividend. On top of this NVO pays more dividend than 92.42% of the companies listed in the same industry.
NVO's Dividend Yield is comparable with the S&P500 average which is at 2.44.
Industry RankSector Rank
Dividend Yield 2.57%

5.2 History

The dividend of NVO is nicely growing with an annual growth rate of 16.56%!
NVO has paid a dividend for at least 10 years, which is a reliable track record.
NVO has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)16.56%
Div Incr Years7
Div Non Decr Years7
NVO Yearly Dividends per shareNVO Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.5 1

5.3 Sustainability

NVO pays out 43.71% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of NVO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP43.71%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
NVO Yearly Income VS Free CF VS DividendNVO Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B 100B
NVO Dividend Payout.NVO Dividend Payout, showing the Payout Ratio.NVO Dividend Payout.PayoutRetained Earnings

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