NOVARTIS AG-SPONSORED ADR (NVS)
US66987V1098 - ADR
We assign a fundamental rating of 6 out of 10 to NVS. NVS was compared to 198 industry peers in the Pharmaceuticals industry. NVS has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. NVS has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year NVS was profitable.
In the past year NVS had a positive cash flow from operations.
In the past 5 years NVS has always been profitable.
Each year in the past 5 years NVS had a positive operating cash flow.
1.2 Ratios
With an excellent Return On Assets value of 17.15%, NVS belongs to the best of the industry, outperforming 97.44% of the companies in the same industry.
NVS's Return On Equity of 36.73% is amongst the best of the industry. NVS outperforms 95.90% of its industry peers.
Looking at the Return On Invested Capital, with a value of 19.33%, NVS belongs to the top of the industry, outperforming 95.90% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for NVS is significantly below the industry average of 16.40%.
The last Return On Invested Capital (19.33%) for NVS is above the 3 year average (11.23%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.15% | ||
| ROE | 36.73% | ||
| ROIC | 19.33% |
ROA(3y)13%
ROA(5y)11.05%
ROE(3y)26.35%
ROE(5y)22.89%
ROIC(3y)11.23%
ROIC(5y)11.01%
1.3 Margins
NVS has a Profit Margin of 28.63%. This is amongst the best in the industry. NVS outperforms 95.38% of its industry peers.
NVS's Profit Margin has improved in the last couple of years.
The Operating Margin of NVS (26.64%) is better than 93.33% of its industry peers.
In the last couple of years the Operating Margin of NVS has grown nicely.
The Gross Margin of NVS (73.53%) is better than 80.00% of its industry peers.
In the last couple of years the Gross Margin of NVS has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.64% | ||
| PM (TTM) | 28.63% | ||
| GM | 73.53% |
OM growth 3Y3.15%
OM growth 5Y4.74%
PM growth 3Y25.3%
PM growth 5Y3.04%
GM growth 3Y1.43%
GM growth 5Y1.03%
2. Health
2.1 Basic Checks
NVS 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, NVS has less shares outstanding
Compared to 5 years ago, NVS has less shares outstanding
NVS has a worse debt/assets ratio than last year.
2.2 Solvency
NVS has an Altman-Z score of 4.06. This indicates that NVS is financially healthy and has little risk of bankruptcy at the moment.
NVS's Altman-Z score of 4.06 is fine compared to the rest of the industry. NVS outperforms 80.00% of its industry peers.
NVS has a debt to FCF ratio of 2.25. This is a good value and a sign of high solvency as NVS would need 2.25 years to pay back of all of its debts.
The Debt to FCF ratio of NVS (2.25) is better than 93.85% of its industry peers.
A Debt/Equity ratio of 0.43 indicates that NVS is not too dependend on debt financing.
NVS has a worse Debt to Equity ratio (0.43) than 62.05% of its industry peers.
Although NVS 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 | 0.43 | ||
| Debt/FCF | 2.25 | ||
| Altman-Z | 4.06 |
ROIC/WACC3.91
WACC4.94%
2.3 Liquidity
A Current Ratio of 1.16 indicates that NVS should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.16, NVS is doing worse than 84.62% of the companies in the same industry.
NVS has a Quick Ratio of 1.16. This is a bad value and indicates that NVS is not financially healthy enough and could expect problems in meeting its short term obligations.
NVS has a worse Quick ratio (0.93) than 81.54% of its industry peers.
NVS 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 | 1.16 | ||
| Quick Ratio | 0.93 |
3. Growth
3.1 Past
NVS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.75%, which is quite good.
The Earnings Per Share has been growing slightly by 6.11% on average over the past years.
The Revenue has grown by 15.70% in the past year. This is quite good.
NVS shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 0.28% yearly.
EPS 1Y (TTM)12.75%
EPS 3Y6.08%
EPS 5Y6.11%
EPS growth Q2Q0.66%
Revenue 1Y (TTM)15.7%
Revenue growth 3Y-2.21%
Revenue growth 5Y0.28%
Revenue growth Q2Q-9.42%
3.2 Future
NVS is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 2.92% yearly.
The Revenue is expected to grow by 1.58% on average over the next years.
EPS Next Y4.17%
EPS Next 2Y7.01%
EPS Next 3Y6.61%
EPS Next 5Y2.92%
Revenue Next Year2.83%
Revenue Next 2Y3.42%
Revenue Next 3Y2.7%
Revenue Next 5Y1.58%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less 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
With a Price/Earnings ratio of 13.90, NVS is valued correctly.
88.21% of the companies in the same industry are more expensive than NVS, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of NVS to the average of the S&P500 Index (25.20), we can say NVS is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 13.34, the valuation of NVS can be described as correct.
NVS's Price/Forward Earnings ratio is rather cheap when compared to the industry. NVS is cheaper than 87.69% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.60, NVS is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.9 | ||
| Fwd PE | 13.34 |
4.2 Price Multiples
88.21% of the companies in the same industry are more expensive than NVS, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaper than 85.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.99 | ||
| EV/EBITDA | 8.69 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of NVS may justify a higher PE ratio.
PEG (NY)3.34
PEG (5Y)2.28
EPS Next 2Y7.01%
EPS Next 3Y6.61%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.78%, NVS has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 4.46, NVS pays a better dividend. On top of this NVS pays more dividend than 95.38% of the companies listed in the same industry.
NVS's Dividend Yield is rather good when compared to the S&P500 average which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.78% |
5.2 History
The dividend of NVS has a limited annual growth rate of 2.97%.
NVS has been paying a dividend for at least 10 years, so it has a reliable track record.
NVS has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)2.97%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
42.32% of the earnings are spent on dividend by NVS. This is a bit on the high side, but may be sustainable.
NVS's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP42.32%
EPS Next 2Y7.01%
EPS Next 3Y6.61%
NOVARTIS AG-SPONSORED ADR
NYSE:NVS (4/23/2024, 7:16:27 PM)
Premarket: 98.54 +1.26 (+1.3%)97.28
+2.16 (+2.27%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap198.84B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.78% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
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Revenue beat(2)
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Revenue beat(8)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.9 | ||
| Fwd PE | 13.34 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.34
PEG (5Y)2.28
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.15% | ||
| ROE | 36.73% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 26.64% | ||
| PM (TTM) | 28.63% | ||
| GM | 73.53% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.6
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.43 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.16 | ||
| Quick Ratio | 0.93 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)12.75%
EPS 3Y6.08%
EPS 5Y
EPS growth Q2Q
EPS Next Y4.17%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)15.7%
Revenue growth 3Y-2.21%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y