Stock Analysis: Decent Value Stocks

Fundamental Rating

We assign a fundamental rating of 6 out of 10 to INCY. INCY was compared to 567 industry peers in the Biotechnology industry. While INCY belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. INCY is valued quite cheap, while showing a decent growth score. This is a good combination! With these ratings, INCY could be worth investigating further for value investing!.

1. Profitability

1.1 Basic Checks

INCY had positive earnings in the past year.

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

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

Looking at the Return On Assets, with a value of 0.60%, INCY belongs to the top of the industry, outperforming 91.01% of the companies in the same industry.

INCY has a better Return On Equity (0.95%) than 91.71% of its industry peers.

Looking at the Return On Invested Capital, with a value of 2.32%, INCY belongs to the top of the industry, outperforming 92.77% of the companies in the same industry.

Measured over the past 3 years, the Average Return On Invested Capital for INCY is significantly below the industry average of 14.24%.

The 3 year average ROIC (7.24%) for INCY is well above the current ROIC(2.32%). The reason for the recent decline needs to be investigated.

		Industry Rank	Sector Rank
ROA	0.6%
ROE	0.95%
ROIC	2.32%

ROA(3y)5.08%

ROA(5y)5.23%

ROE(3y)6.75%

ROE(5y)6.82%

ROIC(3y)7.24%

ROIC(5y)N/A

1.3 Margins

INCY has a better Profit Margin (0.77%) than 91.71% of its industry peers.

In the last couple of years the Profit Margin of INCY has declined.

The Operating Margin of INCY (2.63%) is better than 92.77% of its industry peers.

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

INCY has a better Gross Margin (93.20%) than 93.30% of its industry peers.

In the last couple of years the Gross Margin of INCY has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	2.63%
PM (TTM)	0.77%
GM	93.2%

OM growth 3Y-50.23%

OM growth 5Y-33.03%

PM growth 3Y-71.07%

PM growth 5Y-48.24%

GM growth 3Y-0.87%

GM growth 5Y-0.53%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

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

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

Compared to 5 years ago, INCY has less shares outstanding

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

2.2 Solvency

An Altman-Z score of 4.56 indicates that INCY is not in any danger for bankruptcy at the moment.

With a decent Altman-Z score value of 4.56, INCY is doing good in the industry, outperforming 79.01% of the companies in the same industry.

The Debt to FCF ratio of INCY is 0.15, which is an excellent value as it means it would take INCY, only 0.15 years of fcf income to pay off all of its debts.

Looking at the Debt to FCF ratio, with a value of 0.15, INCY belongs to the top of the industry, outperforming 96.83% of the companies in the same industry.

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 43.03% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.01
Debt/FCF	0.15
Altman-Z	4.56

ROIC/WACC0.23

WACC10.04%

2.3 Liquidity

INCY has a Current Ratio of 1.97. This is a normal value and indicates that INCY is financially healthy and should not expect problems in meeting its short term obligations.

INCY has a worse Current ratio (1.97) than 75.31% of its industry peers.

A Quick Ratio of 1.94 indicates that INCY should not have too much problems paying its short term obligations.

The Quick ratio of INCY (1.94) is worse than 74.25% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.97
Quick Ratio	1.94

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The earnings per share for INCY have decreased strongly by -51.45% in the last year.

Measured over the past years, INCY shows a very negative growth in Earnings Per Share. The EPS has been decreasing by -14.21% on average per year.

Looking at the last year, INCY shows a quite strong growth in Revenue. The Revenue has grown by 17.13% in the last year.

INCY shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.46% yearly.

EPS 1Y (TTM)-51.45%

EPS 3Y-21.7%

EPS 5Y-14.21%

EPS Q2Q%81.25%

Revenue 1Y (TTM)17.13%

Revenue growth 3Y12.41%

Revenue growth 5Y14.46%

Sales Q2Q%19.53%

3.2 Future

INCY is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 25.93% yearly.

Based on estimates for the next years, INCY will show a decrease in Revenue. The Revenue will decrease by -0.65% on average per year.

EPS Next Y350.35%

EPS Next 2Y130.24%

EPS Next 3Y87.87%

EPS Next 5Y25.93%

Revenue Next Year11.03%

Revenue Next 2Y10.11%

Revenue Next 3Y9.98%

Revenue Next 5Y-0.65%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last 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

INCY is valuated quite expensively with a Price/Earnings ratio of 33.98.

Based on the Price/Earnings ratio, INCY is valued cheaply inside the industry as 94.00% of the companies are valued more expensively.

Compared to an average S&P500 Price/Earnings ratio of 28.22, INCY is valued a bit more expensive.

INCY is valuated reasonably with a Price/Forward Earnings ratio of 8.94.

INCY's Price/Forward Earnings ratio is rather cheap when compared to the industry. INCY is cheaper than 97.18% of the companies in the same industry.

The average S&P500 Price/Forward Earnings ratio is at 20.86. INCY is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	33.98
Fwd PE	8.94

4.2 Price Multiples

INCY's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. INCY is cheaper than 93.47% of the companies in the same industry.

INCY's Price/Free Cash Flow ratio is rather cheap when compared to the industry. INCY is cheaper than 93.83% of the companies in the same industry.