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


INCYTE CORP

Nasdaq / Health Care / Biotechnology

Fundamental Rating

7

Overall INCY gets a fundamental rating of 7 out of 10. We evaluated INCY against 587 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! This makes INCY very considerable for value and growth and quality investing!



8

1. Profitability

1.1 Basic Checks

In the past year INCY was profitable.
In the past year INCY had a positive cash flow from operations.
INCY had positive earnings in 4 of the past 5 years.
INCY had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

INCY has a Return On Assets of 10.45%. This is amongst the best in the industry. INCY outperforms 97.27% of its industry peers.
INCY's Return On Equity of 13.82% is amongst the best of the industry. INCY outperforms 96.58% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.44%, INCY belongs to the top of the industry, outperforming 96.58% of the companies in the same industry.
INCY had an Average Return On Invested Capital over the past 3 years of 9.11%. This is significantly below the industry average of 14.12%.
Industry RankSector Rank
ROA 10.45%
ROE 13.82%
ROIC 8.44%
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 has a better Profit Margin (19.78%) than 97.61% of its industry peers.
INCY's Profit Margin has improved in the last couple of years.
INCY has a Operating Margin of 18.91%. This is amongst the best in the industry. INCY outperforms 96.92% of its industry peers.
INCY's Operating Margin has improved in the last couple of years.
INCY's Gross Margin of 93.73% is amongst the best of the industry. INCY outperforms 94.87% of its industry peers.
INCY's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 18.91%
PM (TTM) 19.78%
GM 93.73%
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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7

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), INCY is creating some value.
Compared to 1 year ago, INCY has more shares outstanding
Compared to 5 years ago, INCY has more shares outstanding
The debt/assets ratio for INCY has been reduced compared to a year ago.

2.2 Solvency

INCY has an Altman-Z score of 5.71. This indicates that INCY is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of INCY (5.71) is better than 80.68% of its industry peers.
INCY has a debt to FCF ratio of 0.04. This is a very positive value and a sign of high solvency as it would only need 0.04 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.04, INCY belongs to the top of the industry, outperforming 97.78% of the companies in the same industry.
A Debt/Equity ratio of 0.01 indicates that INCY is not too dependend on debt financing.
INCY has a Debt to Equity ratio (0.01) which is in line with its industry peers.
Industry RankSector Rank
Debt/Equity 0.01
Debt/FCF 0.04
Altman-Z 5.71
ROIC/WACC0.93
WACC9.09%

2.3 Liquidity

INCY has a Current Ratio of 3.47. This indicates that INCY is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 3.47, INCY is doing worse than 61.54% of the companies in the same industry.
A Quick Ratio of 3.43 indicates that INCY has no problem at all paying its short term obligations.
INCY has a worse Quick ratio (3.43) than 60.34% of its industry peers.
Industry RankSector Rank
Current Ratio 3.47
Quick Ratio 3.43

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7

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 45.77% over the past year.
INCY shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 27.86% yearly.
Looking at the last year, INCY shows a quite strong growth in Revenue. The Revenue has grown by 8.58% in the last year.
The Revenue has been growing by 14.45% on average over the past years. This is quite good.
EPS 1Y (TTM)45.77%
EPS 3YN/A
EPS 5Y27.86%
EPS growth Q2Q72.97%
Revenue 1Y (TTM)8.58%
Revenue growth 3Y11.49%
Revenue growth 5Y14.45%
Revenue growth Q2Q8.93%

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 17.85% on average per year.
The Revenue is expected to grow by 8.58% on average over the next years. This is quite good.
EPS Next Y31.69%
EPS Next 2Y24.97%
EPS Next 3Y24.94%
EPS Next 5Y17.85%
Revenue Next Year12.46%
Revenue Next 2Y11.59%
Revenue Next 3Y11.38%
Revenue Next 5Y8.58%

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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9

4. Valuation

4.1 Price/Earnings Ratio

INCY is valuated correctly with a Price/Earnings ratio of 14.12.
Compared to the rest of the industry, the Price/Earnings ratio of INCY indicates a rather cheap valuation: INCY is cheaper than 97.44% of the companies listed in the same industry.
INCY is valuated rather cheaply when we compare the Price/Earnings ratio to 28.05, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 9.73, the valuation of INCY can be described as reasonable.
Based on the Price/Forward Earnings ratio, INCY is valued cheaper than 98.80% of the companies in the same industry.
INCY's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 20.30.
Industry RankSector Rank
PE 14.12
Fwd PE 9.73

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.
INCY's Price/Free Cash Flow ratio is rather cheap when compared to the industry. INCY is cheaper than 97.78% of the companies in the same industry.
Industry RankSector Rank
P/FCF 15.19
EV/EBITDA 9.88

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of INCY may justify a higher PE ratio.
INCY's earnings are expected to grow with 24.94% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.45
PEG (5Y)0.51
EPS Next 2Y24.97%
EPS Next 3Y24.94%

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0

5. Dividend

5.1 Amount

No dividends for INCY!.
Industry RankSector Rank
Dividend Yield N/A

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