Stock Analysis: Affordable Growth

Fundamental Rating

Overall INCY gets a fundamental rating of 7 out of 10. We evaluated INCY against 588 industry peers in the Biotechnology industry. INCY scores excellent points on both the profitability and health parts. This is a solid base for a good stock. INCY has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination! With these ratings, INCY could be worth investigating further for value and growth and quality investing!.

1. Profitability

1.1 Basic Checks

INCY had positive earnings in the past year.

In the past year INCY had a positive cash flow from operations.

Of the past 5 years INCY 4 years were profitable.

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

1.2 Ratios

Looking at the Return On Assets, with a value of 8.81%, INCY belongs to the top of the industry, outperforming 96.92% of the companies in the same industry.

The Return On Equity of INCY (11.51%) is better than 96.58% of its industry peers.

With an excellent Return On Invested Capital value of 8.00%, INCY belongs to the best of the industry, outperforming 96.40% 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 13.58%.

		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 97.09% of its industry peers.

INCY's Profit Margin has improved in the last couple of years.

The Operating Margin of INCY (17.64%) is better than 96.75% of its industry peers.

INCY's Operating Margin has improved in the last couple of years.

INCY has a better Gross Margin (93.71%) than 95.21% 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

INCY has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.

INCY has more shares outstanding than it did 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

An Altman-Z score of 5.87 indicates that INCY is not in any danger for bankruptcy at the moment.

INCY has a Altman-Z score of 5.87. This is amongst the best in the industry. INCY outperforms 82.02% of its industry peers.

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.

The Debt to FCF ratio of INCY (0.07) is better than 97.60% of its industry peers.

A Debt/Equity ratio of 0.01 indicates that INCY is not too dependend on debt financing.

INCY's Debt to Equity ratio of 0.01 is in line compared to the rest of the industry. INCY outperforms 46.75% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.01
Debt/FCF	0.07
Altman-Z	5.87

ROIC/WACC0.87

WACC9.24%

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 of 3.75. This is comparable to the rest of the industry: INCY outperforms 42.29% of its industry peers.

A Quick Ratio of 3.69 indicates that INCY has no problem at all paying its short term obligations.

INCY has a Quick ratio (3.69) which is in line with its industry peers.

		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.

INCY shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 27.86% yearly.

The Revenue has grown by 8.87% in the past year. This is quite good.

Measured over the past years, INCY shows a quite strong growth in Revenue. The Revenue has been growing by 14.45% on average per year.

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

The Earnings Per Share is expected to grow by 18.66% on average over the next years. This is quite good.

Based on estimates for the next years, INCY will show a quite strong growth in Revenue. The Revenue will grow by 8.13% on average per year.

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

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 14.58, the valuation of INCY can be described as correct.

Based on the Price/Earnings ratio, INCY is valued cheaply inside the industry as 97.43% of the companies are valued more expensively.

When comparing the Price/Earnings ratio of INCY to the average of the S&P500 Index (25.20), we can say INCY is valued slightly cheaper.

With a Price/Forward Earnings ratio of 11.07, the valuation of INCY can be described as very reasonable.

Based on the Price/Forward Earnings ratio, INCY is valued cheaper than 98.46% of the companies in the same industry.

INCY's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.60.

		Industry Rank	Sector Rank
PE	14.58
Fwd PE	11.07

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, INCY is valued cheaply inside the industry as 97.77% of the companies are valued more expensively.

Compared to the rest of the industry, the Price/Free Cash Flow ratio of INCY indicates a rather cheap valuation: INCY is cheaper than 96.23% of the companies listed in the same industry.