Decent Value Stocks. Analyze the stocks with a good fundamental valuation, while still showing decent profitability, health and growth.


ALKERMES PLC

Nasdaq / Health Care / Biotechnology

Fundamental Rating

6

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 These ratings would make ALKS suitable for value investing!



6

1. Profitability

1.1 Basic Checks

ALKS had positive earnings in the past year.
ALKS had a positive operating cash flow in the past year.
ALKS had negative earnings in 4 of the past 5 years.
In the past 5 years ALKS always reported a positive cash flow from operatings.

1.2 Ratios

ALKS has a better Return On Assets (20.46%) than 99.32% of its industry peers.
With an excellent Return On Equity value of 34.63%, ALKS belongs to the best of the industry, outperforming 98.97% of the companies in the same industry.
ALKS has a better Return On Invested Capital (24.24%) than 99.49% of its industry peers.
Industry RankSector 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

ALKS has a Profit Margin of 25.17%. This is amongst the best in the industry. ALKS outperforms 98.46% of its industry peers.
ALKS has a better Operating Margin (29.60%) than 98.46% of its industry peers.
The Gross Margin of ALKS (85.31%) is better than 89.74% of its industry peers.
In the last couple of years the Gross Margin of ALKS has remained more or less at the same level.
Industry RankSector 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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7

2. Health

2.1 Basic Checks

ALKS 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, ALKS has more shares outstanding
ALKS has more shares outstanding than it did 5 years ago.
The debt/assets ratio for ALKS has been reduced compared to a year ago.

2.2 Solvency

ALKS has an Altman-Z score of 4.18. This indicates that ALKS is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ALKS (4.18) is better than 76.92% 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.
ALKS's Debt to FCF ratio of 0.74 is amongst the best of the industry. ALKS outperforms 96.75% of its industry peers.
ALKS has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
ALKS's Debt to Equity ratio of 0.23 is on the low side compared to the rest of the industry. ALKS is outperformed by 68.55% of its industry peers.
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 RankSector Rank
Debt/Equity 0.23
Debt/FCF 0.74
Altman-Z 4.18
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 has a worse Current ratio (3.20) than 64.44% of its industry peers.
A Quick Ratio of 2.77 indicates that ALKS has no problem at all paying its short term obligations.
ALKS's Quick ratio of 2.77 is on the low side compared to the rest of the industry. ALKS is outperformed by 67.35% of its industry peers.
Industry RankSector Rank
Current Ratio 3.2
Quick Ratio 2.77

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5

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 704.35% over the past year.
ALKS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.41% yearly.
The Revenue has grown by 54.00% in the past year. This is a very strong growth!
ALKS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.74% yearly.
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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9

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 13.24, which indicates a correct valuation of ALKS.
Based on the Price/Earnings ratio, ALKS is valued cheaply inside the industry as 97.61% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 28.53. ALKS is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 8.96 indicates a reasonable valuation of ALKS.
Based on the Price/Forward Earnings ratio, ALKS is valued cheaper than 98.97% of the companies in the same industry.
ALKS is valuated cheaply when we compare the Price/Forward Earnings ratio to 20.31, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 13.24
Fwd PE 8.96

4.2 Price Multiples

98.29% of the companies in the same industry are more expensive than ALKS, based on the Enterprise Value to EBITDA ratio.
99.15% of the companies in the same industry are more expensive than ALKS, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 10.51
EV/EBITDA 5.85

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.
ALKS has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ALKS's earnings are expected to grow with 25.25% in the coming years.
PEG (NY)0.13
PEG (5Y)0.72
EPS Next 2Y38.71%
EPS Next 3Y25.25%

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0

5. Dividend

5.1 Amount

ALKS does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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