NOVARTIS AG-REG (NOT.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:NOT - CH0012005267 - Common Stock
124.94 EUR
+0.26 (+0.21%)
Taking everything into account, NOT scores 6 out of 10 in our fundamental rating. NOT was compared to 55 industry peers in the Pharmaceuticals industry. While NOT belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. NOT is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
- In the past year NOT was profitable.
- NOT had a positive operating cash flow in the past year.
- Each year in the past 5 years NOT has been profitable.
- Each year in the past 5 years NOT had a positive operating cash flow.
1.2 Ratios
- NOT's Return On Assets of 13.42% is amongst the best of the industry. NOT outperforms 85.45% of its industry peers.
- Looking at the Return On Equity, with a value of 32.47%, NOT is in the better half of the industry, outperforming 76.36% of the companies in the same industry.
- Looking at the Return On Invested Capital, with a value of 17.35%, NOT is in the better half of the industry, outperforming 76.36% of the companies in the same industry.
- NOT had an Average Return On Invested Capital over the past 3 years of 11.31%. This is below the industry average of 13.93%.
- The last Return On Invested Capital (17.35%) for NOT is above the 3 year average (11.31%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.42% | ||
| ROE | 32.47% | ||
| ROIC | 17.35% |
ROA(3y)10.82%
ROA(5y)11.4%
ROE(3y)23.55%
ROE(5y)24.08%
ROIC(3y)11.31%
ROIC(5y)9.96%
1.3 Margins
- The Profit Margin of NOT (25.69%) is better than 85.45% of its industry peers.
- NOT's Profit Margin has been stable in the last couple of years.
- NOT's Operating Margin of 33.11% is fine compared to the rest of the industry. NOT outperforms 78.18% of its industry peers.
- In the last couple of years the Operating Margin of NOT has grown nicely.
- The Gross Margin of NOT (76.10%) is better than 78.18% of its industry peers.
- In the last couple of years the Gross Margin of NOT has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 33.11% | ||
| PM (TTM) | 25.69% | ||
| GM | 76.1% |
OM growth 3Y8.17%
OM growth 5Y6.25%
PM growth 3Y-24.95%
PM growth 5Y-0.88%
GM growth 3Y0.5%
GM growth 5Y1.06%
2. Health
2.1 Basic Checks
- NOT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
- The number of shares outstanding for NOT has been reduced compared to 1 year ago.
- Compared to 5 years ago, NOT has less shares outstanding
- Compared to 1 year ago, NOT has a worse debt to assets ratio.
2.2 Solvency
- An Altman-Z score of 4.30 indicates that NOT is not in any danger for bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 4.30, NOT is in line with its industry, outperforming 56.36% of the companies in the same industry.
- The Debt to FCF ratio of NOT is 1.87, which is an excellent value as it means it would take NOT, only 1.87 years of fcf income to pay off all of its debts.
- The Debt to FCF ratio of NOT (1.87) is better than 85.45% of its industry peers.
- NOT has a Debt/Equity ratio of 0.55. This is a neutral value indicating NOT is somewhat dependend on debt financing.
- NOT has a Debt to Equity ratio of 0.55. This is comparable to the rest of the industry: NOT outperforms 58.18% of its industry peers.
- Although NOT 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 | 0.55 | ||
| Debt/FCF | 1.87 | ||
| Altman-Z | 4.3 |
ROIC/WACC3.73
WACC4.65%
2.3 Liquidity
- A Current Ratio of 0.88 indicates that NOT may have some problems paying its short term obligations.
- NOT's Current ratio of 0.88 is on the low side compared to the rest of the industry. NOT is outperformed by 80.00% of its industry peers.
- NOT has a Quick Ratio of 0.88. This is a bad value and indicates that NOT is not financially healthy enough and could expect problems in meeting its short term obligations.
- NOT's Quick ratio of 0.68 is on the low side compared to the rest of the industry. NOT is outperformed by 76.36% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.68 |
3. Growth
3.1 Past
- NOT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 21.33%, which is quite impressive.
- The Earnings Per Share has been growing by 8.14% on average over the past years. This is quite good.
- NOT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.18%.
- The Revenue has been growing slightly by 1.24% on average over the past years.
EPS 1Y (TTM)21.33%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%9.22%
Revenue 1Y (TTM)12.18%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%5.6%
3.2 Future
- The Earnings Per Share is expected to grow by 8.79% on average over the next years. This is quite good.
- NOT is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.27% yearly.
EPS Next Y16.8%
EPS Next 2Y9.28%
EPS Next 3Y8.59%
EPS Next 5Y8.79%
Revenue Next Year9.91%
Revenue Next 2Y6.24%
Revenue Next 3Y5.54%
Revenue Next 5Y5.27%
3.3 Evolution
- The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- NOT is valuated correctly with a Price/Earnings ratio of 16.42.
- 70.91% of the companies in the same industry are more expensive than NOT, based on the Price/Earnings ratio.
- The average S&P500 Price/Earnings ratio is at 27.21. NOT is valued slightly cheaper when compared to this.
- A Price/Forward Earnings ratio of 15.73 indicates a correct valuation of NOT.
- Based on the Price/Forward Earnings ratio, NOT is valued a bit cheaper than 70.91% of the companies in the same industry.
- When comparing the Price/Forward Earnings ratio of NOT to the average of the S&P500 Index (24.26), we can say NOT is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.42 | ||
| Fwd PE | 15.73 |
4.2 Price Multiples
- The rest of the industry has a similar Enterprise Value to EBITDA ratio as NOT.
- Based on the Price/Free Cash Flow ratio, NOT is valued a bit cheaper than 76.36% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.5 | ||
| EV/EBITDA | 12.68 |
4.3 Compensation for Growth
- NOT's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- The decent profitability rating of NOT may justify a higher PE ratio.
PEG (NY)0.98
PEG (5Y)2.02
EPS Next 2Y9.28%
EPS Next 3Y8.59%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.04%, NOT has a reasonable but not impressive dividend return.
- NOT's Dividend Yield is a higher than the industry average which is at 1.61.
- Compared to an average S&P500 Dividend Yield of 1.81, NOT pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.04% |
5.2 History
- The dividend of NOT has a limited annual growth rate of 5.49%.
Dividend Growth(5Y)5.49%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- NOT pays out 54.32% of its income as dividend. This is a bit on the high side, but may be sustainable.
- The dividend of NOT is growing, but earnings are growing more, so the dividend growth is sustainable.
DP54.32%
EPS Next 2Y9.28%
EPS Next 3Y8.59%
NOVARTIS AG-REG / NOT.DE FAQ
Can you provide the ChartMill fundamental rating for NOVARTIS AG-REG?
ChartMill assigns a fundamental rating of 6 / 10 to NOT.DE.
What is the valuation status of NOVARTIS AG-REG (NOT.DE) stock?
ChartMill assigns a valuation rating of 5 / 10 to NOVARTIS AG-REG (NOT.DE). This can be considered as Fairly Valued.
What is the profitability of NOT stock?
NOVARTIS AG-REG (NOT.DE) has a profitability rating of 7 / 10.
How financially healthy is NOVARTIS AG-REG?
The financial health rating of NOVARTIS AG-REG (NOT.DE) is 6 / 10.
What is the earnings growth outlook for NOVARTIS AG-REG?
The Earnings per Share (EPS) of NOVARTIS AG-REG (NOT.DE) is expected to grow by 16.8% in the next year.