Stock Analysis: Decent Value Stocks

Fundamental Rating

Taking everything into account, ALKS scores 6 out of 10 in our fundamental rating. ALKS was compared to 587 industry peers in the Biotechnology industry. While ALKS has a great health rating, its profitability is only average at the moment. ALKS may be a bit undervalued, certainly considering the very reasonable score on growth With these ratings, ALKS could be worth investigating further for value investing!.

1. Profitability

1.1 Basic Checks

In the past year ALKS was profitable.

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

In the past 5 years ALKS reported 4 times negative net income.

Each year in the past 5 years ALKS had a positive operating cash flow.

1.2 Ratios

With an excellent Return On Assets value of 20.46%, ALKS belongs to the best of the industry, outperforming 99.49% of the companies in the same industry.

ALKS has a better Return On Equity (34.63%) than 98.97% of its industry peers.

The Return On Invested Capital of ALKS (24.24%) is better than 99.49% of its industry peers.

		Industry Rank	Sector Rank
ROA	20.46%
ROE	34.63%
ROIC	24.24%

ROA(3y)2.07%

ROA(5y)-2.07%

ROE(3y)3.36%

ROE(5y)-3.68%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

With an excellent Profit Margin value of 25.17%, ALKS belongs to the best of the industry, outperforming 98.46% of the companies in the same industry.

The Operating Margin of ALKS (29.60%) is better than 98.46% of its industry peers.

The Gross Margin of ALKS (85.31%) is better than 89.91% of its industry peers.

ALKS's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	29.6%
PM (TTM)	25.17%
GM	85.31%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y0.78%

GM growth 5Y0.22%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), ALKS is creating value.

Compared to 1 year ago, ALKS has more shares outstanding

The number of shares outstanding for ALKS has been increased compared to 5 years ago.

Compared to 1 year ago, ALKS has an improved debt to assets ratio.

2.2 Solvency

ALKS has an Altman-Z score of 4.19. This indicates that ALKS is financially healthy and has little risk of bankruptcy at the moment.

ALKS has a better Altman-Z score (4.19) than 76.58% of its industry peers.

ALKS has a debt to FCF ratio of 0.74. This is a very positive value and a sign of high solvency as it would only need 0.74 years to pay back of all of its debts.

With an excellent Debt to FCF ratio value of 0.74, ALKS belongs to the best of the industry, outperforming 96.41% of the companies in the same industry.

ALKS has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.

Looking at the Debt to Equity ratio, with a value of 0.23, ALKS is doing worse than 68.21% of the companies in the same industry.

Although ALKS 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 Rank	Sector Rank
Debt/Equity	0.23
Debt/FCF	0.74
Altman-Z	4.19

ROIC/WACC3.3

WACC7.34%

2.3 Liquidity

A Current Ratio of 3.20 indicates that ALKS has no problem at all paying its short term obligations.

ALKS's Current ratio of 3.20 is on the low side compared to the rest of the industry. ALKS is outperformed by 64.44% of its industry peers.

ALKS has a Quick Ratio of 2.77. This indicates that ALKS is financially healthy and has no problem in meeting its short term obligations.

The Quick ratio of ALKS (2.77) is worse than 67.01% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	3.2
Quick Ratio	2.77

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

ALKS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 704.35%, which is quite impressive.

The Earnings Per Share has been growing by 18.41% on average over the past years. This is quite good.

ALKS shows a strong growth in Revenue. In the last year, the Revenue has grown by 54.00%.

Measured over the past years, ALKS shows a quite strong growth in Revenue. The Revenue has been growing by 8.74% on average per year.

EPS 1Y (TTM)704.35%

EPS 3Y48.92%

EPS 5Y18.41%

EPS growth Q2Q4300%

Revenue 1Y (TTM)54%

Revenue growth 3Y16.99%

Revenue growth 5Y8.74%

Revenue growth Q2Q21.83%

3.2 Future

ALKS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.51% yearly.

ALKS is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -2.19% yearly.

EPS Next Y100.77%

EPS Next 2Y38.71%

EPS Next 3Y25.25%

EPS Next 5Y10.51%

Revenue Next Year-7.19%

Revenue Next 2Y-3.42%

Revenue Next 3Y-2.31%

Revenue Next 5Y-2.19%

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.

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

A Price/Earnings ratio of 13.03 indicates a correct valuation of ALKS.

ALKS's Price/Earnings ratio is rather cheap when compared to the industry. ALKS is cheaper than 97.95% of the companies in the same industry.

The average S&P500 Price/Earnings ratio is at 28.05. ALKS is valued rather cheaply when compared to this.

With a Price/Forward Earnings ratio of 8.82, the valuation of ALKS can be described as very reasonable.

99.15% of the companies in the same industry are more expensive than ALKS, based on the Price/Forward Earnings ratio.

When comparing the Price/Forward Earnings ratio of ALKS to the average of the S&P500 Index (20.30), we can say ALKS is valued rather cheaply.

		Industry Rank	Sector Rank
PE	13.03
Fwd PE	8.82

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 98.63% of the companies listed in the same industry.

Based on the Price/Free Cash Flow ratio, ALKS is valued cheaper than 98.80% of the companies in the same industry.