NOVO-NORDISK A/S-SPONS ADR (NVO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:NVO - US6701002056 - ADR
59.33 USD
-1 (-1.66%)
59.0985 USD
-0.23 (-0.39%)
We assign a fundamental rating of 7 out of 10 to NVO. NVO was compared to 190 industry peers in the Pharmaceuticals industry. NVO scores excellent on profitability, but there are some minor concerns on its financial health. NVO has a correct valuation and a medium growth rate. NVO also has an excellent dividend rating. These ratings could make NVO a good candidate for dividend 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.
- In the past 5 years NVO has always 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 (20.26%) than 97.37% of its industry peers.
- With an excellent Return On Equity value of 61.08%, NVO belongs to the best of the industry, outperforming 98.95% of the companies in the same industry.
- Looking at the Return On Invested Capital, with a value of 38.03%, NVO belongs to the top of the industry, outperforming 98.95% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for NVO is significantly above the industry average of 12.83%.
- The 3 year average ROIC (50.29%) for NVO is well above the current ROIC(38.03%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 20.26% | ||
| ROE | 61.08% | ||
| ROIC | 38.03% |
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
- The Profit Margin of NVO (32.88%) is better than 96.32% of its industry peers.
- In the last couple of years the Profit Margin of NVO has grown nicely.
- NVO has a Operating Margin of 42.03%. This is amongst the best in the industry. NVO outperforms 97.37% of its industry peers.
- NVO's Operating Margin has improved in the last couple of years.
- With an excellent Gross Margin value of 82.05%, NVO belongs to the best of the industry, outperforming 86.32% of the companies in the same industry.
- NVO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 42.03% | ||
| PM (TTM) | 32.88% | ||
| GM | 82.05% |
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
- The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so NVO is creating value.
- The number of shares outstanding for NVO has been reduced compared to 1 year ago.
- Compared to 5 years ago, NVO has more shares outstanding
- The debt/assets ratio for NVO is higher compared to a year ago.
2.2 Solvency
- NVO has an Altman-Z score of 4.74. This indicates that NVO is financially healthy and has little risk of bankruptcy at the moment.
- NVO has a better Altman-Z score (4.74) than 72.63% of its industry peers.
- NVO has a debt to FCF ratio of 1.66. This is a very positive value and a sign of high solvency as it would only need 1.66 years to pay back of all of its debts.
- NVO's Debt to FCF ratio of 1.66 is amongst the best of the industry. NVO outperforms 95.26% of its industry peers.
- NVO has a Debt/Equity ratio of 0.52. This is a neutral value indicating NVO is somewhat dependend on debt financing.
- With a Debt to Equity ratio value of 0.52, NVO is not doing good in the industry: 63.68% of the companies in the same industry are doing better.
- Even though the debt/equity ratio score it not favorable for NVO, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 1.66 | ||
| Altman-Z | 4.74 |
ROIC/WACC6.01
WACC6.33%
2.3 Liquidity
- NVO has a Current Ratio of 0.78. This is a bad value and indicates that NVO is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Current ratio of NVO (0.78) is worse than 89.47% of its industry peers.
- NVO has a Quick Ratio of 0.78. 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 0.57, NVO is doing worse than 87.89% 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 | 0.78 | ||
| Quick Ratio | 0.57 |
3. Growth
3.1 Past
- NVO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 10.05%, which is quite good.
- The Earnings Per Share has been growing by 22.54% on average over the past years. This is a very strong growth
- The Revenue has grown by 16.64% in the past year. This is quite good.
- NVO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 18.94% yearly.
EPS 1Y (TTM)10.05%
EPS 3Y29.71%
EPS 5Y22.54%
EPS Q2Q%-26.47%
Revenue 1Y (TTM)16.64%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%5.14%
3.2 Future
- NVO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.49% yearly.
- NVO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.10% yearly.
EPS Next Y4.45%
EPS Next 2Y0.33%
EPS Next 3Y2.25%
EPS Next 5Y5.49%
Revenue Next Year7.98%
Revenue Next 2Y4.04%
Revenue Next 3Y4.95%
Revenue Next 5Y6.1%
3.3 Evolution
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 15.86, NVO is valued correctly.
- Based on the Price/Earnings ratio, NVO is valued cheaper than 85.26% of the companies in the same industry.
- Compared to an average S&P500 Price/Earnings ratio of 28.39, NVO is valued a bit cheaper.
- The Price/Forward Earnings ratio is 16.23, which indicates a correct valuation of NVO.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 81.05% of the companies listed in the same industry.
- When comparing the Price/Forward Earnings ratio of NVO to the average of the S&P500 Index (25.72), we can say NVO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.86 | ||
| Fwd PE | 16.23 |
4.2 Price Multiples
- NVO's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NVO is cheaper than 85.26% of the companies in the same industry.
- 82.63% 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 | 26.97 | ||
| EV/EBITDA | 11.28 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- NVO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)3.57
PEG (5Y)0.7
EPS Next 2Y0.33%
EPS Next 3Y2.25%
5. Dividend
5.1 Amount
- NVO has a Yearly Dividend Yield of 2.94%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 0.46, NVO pays a better dividend. On top of this NVO pays more dividend than 94.21% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, NVO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.94% |
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
- NVO pays out 49.88% of its income as dividend. 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.
DP49.88%
EPS Next 2Y0.33%
EPS Next 3Y2.25%
NOVO-NORDISK A/S-SPONS ADR / NVO FAQ
Can you provide the ChartMill fundamental rating for NOVO-NORDISK A/S-SPONS ADR?
ChartMill assigns a fundamental rating of 7 / 10 to NVO.
What is the valuation status of NOVO-NORDISK A/S-SPONS ADR (NVO) stock?
ChartMill assigns a valuation rating of 6 / 10 to NOVO-NORDISK A/S-SPONS ADR (NVO). This can be considered as Fairly Valued.
Can you provide the profitability details for NOVO-NORDISK A/S-SPONS ADR?
NOVO-NORDISK A/S-SPONS ADR (NVO) has a profitability rating of 9 / 10.
Can you provide the PE and PB ratios for NVO stock?
The Price/Earnings (PE) ratio for NOVO-NORDISK A/S-SPONS ADR (NVO) is 15.86 and the Price/Book (PB) ratio is 9.68.
What is the financial health of NOVO-NORDISK A/S-SPONS ADR (NVO) stock?
The financial health rating of NOVO-NORDISK A/S-SPONS ADR (NVO) is 6 / 10.