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 8 out of 10. The analysis compared the fundamentals against 198 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 evaluated to be cheap and growing strongly. This does not happen too often! With these ratings, NVO could be worth investigating further for value and growth and quality investing!.
1. Profitability
1.1 Basic Checks
In the past year NVO was profitable.
In the past year NVO had a positive cash flow from operations.
NVO had positive earnings in each of the past 5 years.
In the past 5 years NVO always reported a positive cash flow from operatings.
1.2 Ratios
NVO has a better Return On Assets (21.68%) than 98.48% of its industry peers.
NVO has a Return On Equity of 70.38%. This is amongst the best in the industry. NVO outperforms 98.48% of its industry peers.
With an excellent Return On Invested Capital value of 43.02%, NVO belongs to the best of the industry, outperforming 98.48% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for NVO is significantly above the industry average of 42.34%.
The last Return On Invested Capital (43.02%) for NVO is well below the 3 year average (50.29%), which needs to be investigated, but indicates that NVO had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.68% | ||
| ROE | 70.38% | ||
| ROIC | 43.02% |
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
With an excellent Profit Margin value of 34.78%, NVO belongs to the best of the industry, outperforming 96.97% of the companies in the same industry.
In the last couple of years the Profit Margin of NVO has grown nicely.
NVO has a better Operating Margin (46.16%) than 97.47% of its industry peers.
In the last couple of years the Operating Margin of NVO has grown nicely.
The Gross Margin of NVO (84.67%) is better than 89.39% of its industry peers.
NVO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 46.16% | ||
| PM (TTM) | 34.78% | ||
| GM | 84.67% |
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
NVO 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, NVO has less shares outstanding
NVO has more shares outstanding than it did 5 years ago.
NVO has a worse debt/assets ratio than last year.
2.2 Solvency
NVO has an Altman-Z score of 5.57. This indicates that NVO is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 5.57, NVO belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
NVO has a debt to FCF ratio of 1.48. This is a very positive value and a sign of high solvency as it would only need 1.48 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.48, NVO belongs to the top of the industry, outperforming 94.44% of the companies in the same industry.
NVO has a Debt/Equity ratio of 0.62. This is a neutral value indicating NVO is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.62, NVO is not doing good in the industry: 63.13% 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 | 0.62 | ||
| Debt/FCF | 1.48 | ||
| Altman-Z | 5.57 |
ROIC/WACC6.24
WACC6.89%
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.
With a Current ratio value of 0.74, NVO is not doing good in the industry: 88.38% of the companies in the same industry are doing better.
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.
Looking at the Quick ratio, with a value of 0.55, NVO is doing worse than 88.89% of the companies in the same industry.
NVO does not score too well on the current and quick ratio evaluation. However, as it has 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 | 0.55 |
3. Growth
3.1 Past
NVO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.52%, which is quite good.
NVO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.68% yearly.
Looking at the last year, NVO shows a very strong growth in Revenue. The Revenue has grown by 25.03%.
The Revenue has been growing by 18.94% on average over the past years. This is quite good.
EPS 1Y (TTM)15.52%
EPS 3Y2.95%
EPS 5Y6.68%
EPS Q2Q%6.42%
Revenue 1Y (TTM)25.03%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%10.71%
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 13.97% yearly.
The Revenue is expected to grow by 12.68% on average over the next years. This is quite good.
EPS Next Y19.72%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
EPS Next 5Y13.97%
Revenue Next Year19.4%
Revenue Next 2Y17.49%
Revenue Next 3Y15.32%
Revenue Next 5Y12.68%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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
The Price/Earnings ratio is 19.24, which indicates a rather expensive current valuation of NVO.
Based on the Price/Earnings ratio, NVO is valued cheaply inside the industry as 82.83% of the companies are valued more expensively.
NVO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.82.
Based on the Price/Forward Earnings ratio of 13.34, the valuation of NVO can be described as correct.
82.32% of the companies in the same industry are more expensive than NVO, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of NVO to the average of the S&P500 Index (21.76), we can say NVO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.24 | ||
| Fwd PE | 13.34 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NVO is valued cheaper than 81.31% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NVO is valued cheaper than 80.30% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.31 | ||
| EV/EBITDA | 13.46 |
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.
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)0.98
PEG (5Y)2.88
EPS Next 2Y21.13%
EPS Next 3Y18.2%
5. Dividend
5.1 Amount
NVO has a Yearly Dividend Yield of 2.50%. Purely for dividend investing, there may be better candidates out there.
The stock price of NVO dropped by -23.54% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
NVO's Dividend Yield is rather good when compared to the industry average which is at 4.20. NVO pays more dividend than 92.93% of the companies in the same industry.
NVO's Dividend Yield is comparable with the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.5% |
5.2 History
The dividend of NVO is nicely growing with an annual growth rate of 16.56%!
NVO has paid a dividend for at least 10 years, which is 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
43.71% of the earnings are spent on dividend by NVO. This is a bit on the high side, but may be sustainable.
NVO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP43.71%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
67.35
-0.82 (-1.2%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners37.62%
Inst Owner Change-1.81%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap299.26B
Analysts74.38
Price Target103.72 (54%)
Short Float %0.6%
Short Ratio2.64
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.5% |
Yearly Dividend1.51
Dividend Growth(5Y)16.56%
DP43.71%
Div Incr Years7
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.05%
Min EPS beat(2)0.64%
Max EPS beat(2)7.46%
EPS beat(4)3
Avg EPS beat(4)2.73%
Min EPS beat(4)-4.65%
Max EPS beat(4)7.46%
EPS beat(8)6
Avg EPS beat(8)2.56%
EPS beat(12)9
Avg EPS beat(12)2.47%
EPS beat(16)13
Avg EPS beat(16)3.1%
Revenue beat(2)1
Avg Revenue beat(2)2.19%
Min Revenue beat(2)-2.57%
Max Revenue beat(2)6.95%
Revenue beat(4)2
Avg Revenue beat(4)1.23%
Min Revenue beat(4)-2.57%
Max Revenue beat(4)6.95%
Revenue beat(8)5
Avg Revenue beat(8)1.24%
Revenue beat(12)8
Avg Revenue beat(12)1.42%
Revenue beat(16)12
Avg Revenue beat(16)1.54%
PT rev (1m)-13.33%
PT rev (3m)-15.81%
EPS NQ rev (1m)-0.48%
EPS NQ rev (3m)-5.35%
EPS NY rev (1m)0%
EPS NY rev (3m)-2.61%
Revenue NQ rev (1m)-0.07%
Revenue NQ rev (3m)-2.37%
Revenue NY rev (1m)-3.25%
Revenue NY rev (3m)-1.86%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.24 | ||
| Fwd PE | 13.34 | ||
| P/S | 6.79 | ||
| P/FCF | 28.31 | ||
| P/OCF | 16.3 | ||
| P/B | 13.74 | ||
| P/tB | 60.88 | ||
| EV/EBITDA | 13.46 |
EPS(TTM)3.5
EY5.2%
EPS(NY)5.05
Fwd EY7.5%
FCF(TTM)2.38
FCFY3.53%
OCF(TTM)4.13
OCFY6.13%
SpS9.92
BVpS4.9
TBVpS1.11
PEG (NY)0.98
PEG (5Y)2.88
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.68% | ||
| ROE | 70.38% | ||
| ROCE | 53.99% | ||
| ROIC | 43.02% | ||
| ROICexc | 48.11% | ||
| ROICexgc | 96.32% | ||
| OM | 46.16% | ||
| PM (TTM) | 34.78% | ||
| GM | 84.67% | ||
| FCFM | 23.99% |
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 | 0.62 | ||
| Debt/FCF | 1.48 | ||
| Debt/EBITDA | 0.59 | ||
| Cap/Depr | 268.54% | ||
| Cap/Sales | 17.67% | ||
| Interest Coverage | 219.02 | ||
| Cash Conversion | 78.99% | ||
| Profit Quality | 68.98% | ||
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.55 | ||
| Altman-Z | 5.57 |
F-Score5
WACC6.89%
ROIC/WACC6.24
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)15.52%
EPS 3Y2.95%
EPS 5Y6.68%
EPS Q2Q%6.42%
EPS Next Y19.72%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
EPS Next 5Y13.97%
Revenue 1Y (TTM)25.03%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%10.71%
Revenue Next Year19.4%
Revenue Next 2Y17.49%
Revenue Next 3Y15.32%
Revenue Next 5Y12.68%
EBIT growth 1Y30.68%
EBIT growth 3Y32.76%
EBIT growth 5Y20.94%
EBIT Next Year40.14%
EBIT Next 3Y22.7%
EBIT Next 5Y15.67%
FCF growth 1Y-0.5%
FCF growth 3Y13.52%
FCF growth 5Y14.4%
OCF growth 1Y11.07%
OCF growth 3Y30.05%
OCF growth 5Y20.93%