NOVO-NORDISK A/S-SPONS ADR (NVO) Stock Fundamental Analysis
NYSE:NVO - New York Stock Exchange, Inc. - US6701002056 - ADR - Currency: USD
NVO gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 195 industry peers in the Pharmaceuticals industry. NVO gets an excellent profitability rating and is at the same time showing great financial health properties. NVO is growing strongly while it is still valued neutral. This is a good combination! These ratings could make NVO a good candidate for growth and quality investing.
1. Profitability
1.1 Basic Checks
NVO had positive earnings in the past year.
In the past year NVO had a positive cash flow from operations.
Each year in the past 5 years NVO has been profitable.
NVO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
NVO has a better Return On Assets (21.39%) than 99.49% of its industry peers.
With an excellent Return On Equity value of 75.51%, NVO belongs to the best of the industry, outperforming 98.97% of the companies in the same industry.
NVO's Return On Invested Capital of 44.39% is amongst the best of the industry. NVO outperforms 99.49% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NVO is significantly above the industry average of 14.70%.
The 3 year average ROIC (50.29%) for NVO is well above the current ROIC(44.39%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.39% | ||
| ROE | 75.51% | ||
| ROIC | 44.39% |
ROA(3y)23.77%
ROA(5y)24.99%
ROE(3y)71.81%
ROE(5y)69.89%
ROIC(3y)50.29%
ROIC(5y)49.64%
1.3 Margins
NVO has a better Profit Margin (34.51%) than 97.44% of its industry peers.
NVO's Profit Margin has improved in the last couple of years.
The Operating Margin of NVO (46.51%) is better than 97.95% of its industry peers.
In the last couple of years the Operating Margin of NVO has grown nicely.
Looking at the Gross Margin, with a value of 84.33%, NVO belongs to the top of the industry, outperforming 89.74% 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 Rank | Sector Rank | ||
|---|---|---|---|
| OM | 46.51% | ||
| PM (TTM) | 34.51% | ||
| GM | 84.33% |
OM growth 3Y4.3%
OM growth 5Y1.69%
PM growth 3Y0.84%
PM growth 5Y1.73%
GM growth 3Y0.72%
GM growth 5Y0.24%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), NVO is creating value.
NVO has less shares outstanding than it did 1 year ago.
The number of shares outstanding for NVO has been increased compared to 5 years ago.
NVO has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.75 indicates that NVO is not in any danger for bankruptcy at the moment.
NVO has a Altman-Z score of 5.75. This is amongst the best in the industry. NVO outperforms 82.05% of its industry peers.
The Debt to FCF ratio of NVO is 1.60, which is an excellent value as it means it would take NVO, only 1.60 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.60, NVO belongs to the top of the industry, outperforming 94.36% of the companies in the same industry.
A Debt/Equity ratio of 0.70 indicates that NVO is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.70, NVO is not doing good in the industry: 67.18% of the companies in the same industry are doing better.
Although NVO 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 | 0.7 | ||
| Debt/FCF | 1.6 | ||
| Altman-Z | 5.75 |
ROIC/WACC7.27
WACC6.11%
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.
NVO has a worse Current ratio (0.74) than 89.23% of its industry peers.
NVO has a Quick 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.
With a Quick ratio value of 0.56, NVO is not doing good in the industry: 89.74% of the companies in the same industry are doing better.
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 Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.56 |
3. Growth
3.1 Past
NVO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 17.96%, which is quite good.
Measured over the past 5 years, NVO shows a small growth in Earnings Per Share. The EPS has been growing by 6.68% on average per year.
Looking at the last year, NVO shows a very strong growth in Revenue. The Revenue has grown by 24.11%.
Measured over the past years, NVO shows a quite strong growth in Revenue. The Revenue has been growing by 18.94% on average per year.
EPS 1Y (TTM)17.96%
EPS 3Y2.95%
EPS 5Y6.68%
EPS Q2Q%14.96%
Revenue 1Y (TTM)24.11%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%19.49%
3.2 Future
NVO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.29% yearly.
Based on estimates for the next years, NVO will show a quite strong growth in Revenue. The Revenue will grow by 11.94% on average per year.
EPS Next Y19.72%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
EPS Next 5Y14.29%
Revenue Next Year19.4%
Revenue Next 2Y17.49%
Revenue Next 3Y15.32%
Revenue Next 5Y11.94%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
NVO is valuated rather expensively with a Price/Earnings ratio of 21.99.
83.08% of the companies in the same industry are more expensive than NVO, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 26.31. NVO is around the same levels.
A Price/Forward Earnings ratio of 15.57 indicates a correct valuation of NVO.
NVO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. NVO is cheaper than 77.95% of the companies in the same industry.
NVO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.13.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.99 | ||
| Fwd PE | 15.57 |
4.2 Price Multiples
82.05% of the companies in the same industry are more expensive than NVO, based on the Enterprise Value to EBITDA ratio.
80.51% of the companies in the same industry are more expensive than NVO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.91 | ||
| EV/EBITDA | 14.74 |
4.3 Compensation for Growth
NVO's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of NVO may justify a higher PE ratio.
NVO's earnings are expected to grow with 18.20% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.12
PEG (5Y)3.29
EPS Next 2Y21.13%
EPS Next 3Y18.2%
5. Dividend
5.1 Amount
NVO has a Yearly Dividend Yield of 2.20%. Purely for dividend investing, there may be better candidates out there.
NVO's Dividend Yield is rather good when compared to the industry average which is at 3.97. NVO pays more dividend than 92.31% of the companies in the same industry.
NVO's Dividend Yield is comparable with the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
5.2 History
On average, the dividend of NVO grows each year by 16.56%, which is quite nice.
NVO has been paying a dividend for at least 10 years, so it has a reliable track record.
As NVO did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)16.56%
Div Incr Years7
Div Non Decr Years7
5.3 Sustainability
48.61% 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.
DP48.61%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
79.83
-1.22 (-1.51%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners36.28%
Inst Owner Change-1.5%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap354.71B
Analysts74.38
Price Target105.14 (31.7%)
Short Float %0.66%
Short Ratio2.62
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
Yearly Dividend1.53
Dividend Growth(5Y)16.56%
DP48.61%
Div Incr Years7
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.7%
Min EPS beat(2)3.94%
Max EPS beat(2)7.46%
EPS beat(4)3
Avg EPS beat(4)1.85%
Min EPS beat(4)-4.65%
Max EPS beat(4)7.46%
EPS beat(8)6
Avg EPS beat(8)2.79%
EPS beat(12)9
Avg EPS beat(12)2.12%
EPS beat(16)13
Avg EPS beat(16)2.95%
Revenue beat(2)1
Avg Revenue beat(2)2.92%
Min Revenue beat(2)-1.11%
Max Revenue beat(2)6.95%
Revenue beat(4)1
Avg Revenue beat(4)0.36%
Min Revenue beat(4)-2.57%
Max Revenue beat(4)6.95%
Revenue beat(8)4
Avg Revenue beat(8)0.95%
Revenue beat(12)7
Avg Revenue beat(12)0.8%
Revenue beat(16)11
Avg Revenue beat(16)1.29%
PT rev (1m)1.37%
PT rev (3m)-11.81%
EPS NQ rev (1m)-8.64%
EPS NQ rev (3m)-12.39%
EPS NY rev (1m)-0.24%
EPS NY rev (3m)-2.73%
Revenue NQ rev (1m)-3.68%
Revenue NQ rev (3m)-5.18%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-3.25%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.99 | ||
| Fwd PE | 15.57 | ||
| P/S | 7.58 | ||
| P/FCF | 30.91 | ||
| P/OCF | 17.51 | ||
| P/B | 16.59 | ||
| P/tB | 78.81 | ||
| EV/EBITDA | 14.74 |
EPS(TTM)3.63
EY4.55%
EPS(NY)5.13
Fwd EY6.42%
FCF(TTM)2.58
FCFY3.24%
OCF(TTM)4.56
OCFY5.71%
SpS10.53
BVpS4.81
TBVpS1.01
PEG (NY)1.12
PEG (5Y)3.29
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.39% | ||
| ROE | 75.51% | ||
| ROCE | 55.72% | ||
| ROIC | 44.39% | ||
| ROICexc | 53.11% | ||
| ROICexgc | 110% | ||
| OM | 46.51% | ||
| PM (TTM) | 34.51% | ||
| GM | 84.33% | ||
| FCFM | 24.53% |
ROA(3y)23.77%
ROA(5y)24.99%
ROE(3y)71.81%
ROE(5y)69.89%
ROIC(3y)50.29%
ROIC(5y)49.64%
ROICexc(3y)60.7%
ROICexc(5y)59.32%
ROICexgc(3y)124.92%
ROICexgc(5y)112.44%
ROCE(3y)63.71%
ROCE(5y)65.35%
ROICexcg growth 3Y-1.28%
ROICexcg growth 5Y0.46%
ROICexc growth 3Y-2.16%
ROICexc growth 5Y-9.95%
OM growth 3Y4.3%
OM growth 5Y1.69%
PM growth 3Y0.84%
PM growth 5Y1.73%
GM growth 3Y0.72%
GM growth 5Y0.24%
F-Score5
Asset Turnover0.62
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.7 | ||
| Debt/FCF | 1.6 | ||
| Debt/EBITDA | 0.6 | ||
| Cap/Depr | 284.1% | ||
| Cap/Sales | 18.77% | ||
| Interest Coverage | 108.03 | ||
| Cash Conversion | 81.52% | ||
| Profit Quality | 71.08% | ||
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.56 | ||
| Altman-Z | 5.75 |
F-Score5
WACC6.11%
ROIC/WACC7.27
Cap/Depr(3y)294.05%
Cap/Depr(5y)277.71%
Cap/Sales(3y)14.25%
Cap/Sales(5y)13.08%
Profit Quality(3y)89.38%
Profit Quality(5y)87.75%
High Growth Momentum
Growth
EPS 1Y (TTM)17.96%
EPS 3Y2.95%
EPS 5Y6.68%
EPS Q2Q%14.96%
EPS Next Y19.72%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
EPS Next 5Y14.29%
Revenue 1Y (TTM)24.11%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%19.49%
Revenue Next Year19.4%
Revenue Next 2Y17.49%
Revenue Next 3Y15.32%
Revenue Next 5Y11.94%
EBIT growth 1Y28.85%
EBIT growth 3Y32.76%
EBIT growth 5Y20.94%
EBIT Next Year32.99%
EBIT Next 3Y20.98%
EBIT Next 5Y13.43%
FCF growth 1Y10.42%
FCF growth 3Y13.52%
FCF growth 5Y14.4%
OCF growth 1Y54.2%
OCF growth 3Y30.05%
OCF growth 5Y20.93%