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

We assign a fundamental rating of 8 out of 10 to NVO. NVO was compared to 198 industry peers in the Pharmaceuticals industry. NVO has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. NVO has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination! These ratings could make NVO a good candidate for value and growth and quality investing.


Dividend Valuation Growth Profitability Health

9

1. Profitability

1.1 Basic Checks

In the past year NVO was profitable.
In the past year NVO had a positive cash flow from operations.
In the past 5 years NVO has always been profitable.
Each year in the past 5 years NVO had a positive operating cash flow.
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 has a better Return On Assets (21.68%) than 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.
The Average Return On Invested Capital over the past 3 years for NVO is significantly above the industry average of 41.61%.
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

NVO has a better Profit Margin (34.78%) than 96.97% of its industry peers.
In the last couple of years the Profit Margin of NVO has grown nicely.
NVO has a Operating Margin of 46.16%. This is amongst the best in the industry. NVO outperforms 97.47% of its industry peers.
In the last couple of years the Operating Margin of NVO has grown nicely.
With an excellent Gross Margin value of 84.67%, NVO belongs to the best of the industry, outperforming 88.89% of the companies in the same industry.
In the last couple of years the Gross Margin of NVO has remained more or less at the same level.
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

More info and screens

7

2. Health

2.1 Basic Checks

NVO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, NVO has less shares outstanding
Compared to 5 years ago, NVO has more shares outstanding
Compared to 1 year ago, NVO has a worse debt to assets ratio.
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

An Altman-Z score of 5.47 indicates that NVO is not in any danger for bankruptcy at the moment.
The Altman-Z score of NVO (5.47) is better than 83.33% of its industry peers.
NVO has a debt to FCF ratio of 1.48. This is a very positive value and a sign of high solvency as it would only need 1.48 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 1.48, NVO belongs to the best of the industry, outperforming 93.94% of the companies in the same industry.
NVO has a Debt/Equity ratio of 0.62. This is a neutral value indicating NVO is somewhat dependend on debt financing.
The Debt to Equity ratio of NVO (0.62) is worse than 63.13% of its industry peers.
Even though the debt/equity ratio score it not favorable for NVO, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
Industry RankSector Rank
Debt/Equity 0.62
Debt/FCF 1.48
Altman-Z 5.47
ROIC/WACC6.24
WACC6.89%
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

NVO has a Current 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 Current ratio of NVO (0.74) is worse than 88.38% of its industry peers.
A Quick Ratio of 0.55 indicates that NVO may have some problems paying its short term obligations.
NVO has a Quick ratio of 0.55. This is amonst the worse of the industry: NVO underperforms 89.39% of its industry peers.
The current and quick ratio evaluation for NVO is rather negative, while it does have 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

More info and screens

7

3. Growth

3.1 Past

NVO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 21.57%, which is quite impressive.
NVO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.68% yearly.
NVO shows a strong growth in Revenue. In the last year, the Revenue has grown by 25.03%.
The Revenue has been growing by 18.94% on average over the past years. This is quite good.
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

The Earnings Per Share is expected to grow by 13.97% on average over the next years. This is quite good.
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

More info and screens

7

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 19.58, the valuation of NVO can be described as rather expensive.
Based on the Price/Earnings ratio, NVO is valued cheaper than 82.83% of the companies in the same industry.
NVO's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 23.99.
The Price/Forward Earnings ratio is 16.38, which indicates a correct valuation of NVO.
82.83% of the companies in the same industry are more expensive than NVO, based on the Price/Forward Earnings ratio.
NVO is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 20.35, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 19.58
Fwd PE 16.38
NVO Price Earnings VS Forward Price EarningsNVO Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 81.31% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, NVO is valued cheaply inside the industry as 80.81% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 28.36
EV/EBITDA 13.09
NVO Per share dataNVO EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6 8

4.3 Compensation for Growth

NVO's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of NVO may justify a higher PE ratio.
A more expensive valuation may be justified as NVO's earnings are expected to grow with 18.20% in the coming years.
PEG (NY)0.99
PEG (5Y)2.93
EPS Next 2Y21.13%
EPS Next 3Y18.2%

More info and screens

6

5. Dividend

5.1 Amount

NVO has a Yearly Dividend Yield of 2.55%. Purely for dividend investing, there may be better candidates out there.
The stock price of NVO dropped by -21.84% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
Compared to an average industry Dividend Yield of 4.21, 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 2.55%

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

43.71% of the earnings are spent on dividend by NVO. 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

More info and screens