NOVARTIS AG-SPONSORED ADR (NVS) Stock Fundamental Analysis
NYSE:NVS - New York Stock Exchange, Inc. - US66987V1098 - ADR - Currency: USD
Overall NVS gets a fundamental rating of 7 out of 10. We evaluated NVS against 193 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 scores decently on growth, while it is valued quite cheap. This could make an interesting combination. NVS also has an excellent dividend rating. With these ratings, NVS could be worth investigating further for value and dividend and quality investing!.
1. Profitability
1.1 Basic Checks
NVS had positive earnings in the past year.
In the past year NVS had a positive cash flow from operations.
Each year in the past 5 years NVS has been profitable.
NVS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 13.08%, NVS belongs to the best of the industry, outperforming 95.34% of the companies in the same industry.
With an excellent Return On Equity value of 32.52%, NVS belongs to the best of the industry, outperforming 96.37% of the companies in the same industry.
NVS's Return On Invested Capital of 22.91% is amongst the best of the industry. NVS outperforms 96.89% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NVS is in line with the industry average of 14.96%.
The last Return On Invested Capital (22.91%) for NVS is above the 3 year average (14.58%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.08% | ||
| ROE | 32.52% | ||
| ROIC | 22.91% |
ROA(3y)10.82%
ROA(5y)11.4%
ROE(3y)23.55%
ROE(5y)24.08%
ROIC(3y)14.58%
ROIC(5y)12.83%
1.3 Margins
The Profit Margin of NVS (24.90%) is better than 95.34% of its industry peers.
NVS's Profit Margin has been stable in the last couple of years.
The Operating Margin of NVS (33.45%) is better than 95.34% of its industry peers.
NVS's Operating Margin has improved in the last couple of years.
NVS's Gross Margin of 76.12% is amongst the best of the industry. NVS outperforms 84.46% of its industry peers.
NVS's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 33.45% | ||
| PM (TTM) | 24.9% | ||
| GM | 76.12% |
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so NVS is creating value.
The number of shares outstanding for NVS has been reduced compared to 1 year ago.
NVS has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, NVS has a worse debt to assets ratio.
2.2 Solvency
NVS has an Altman-Z score of 3.78. This indicates that NVS is financially healthy and has little risk of bankruptcy at the moment.
NVS has a better Altman-Z score (3.78) than 75.65% of its industry peers.
NVS has a debt to FCF ratio of 1.93. This is a very positive value and a sign of high solvency as it would only need 1.93 years to pay back of all of its debts.
The Debt to FCF ratio of NVS (1.93) is better than 94.30% of its industry peers.
NVS has a Debt/Equity ratio of 0.57. This is a neutral value indicating NVS is somewhat dependend on debt financing.
NVS has a worse Debt to Equity ratio (0.57) than 63.73% 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 | 0.57 | ||
| Debt/FCF | 1.93 | ||
| Altman-Z | 3.78 |
ROIC/WACC4.79
WACC4.78%
2.3 Liquidity
NVS has a Current Ratio of 0.82. This is a bad value and indicates that NVS is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.82, NVS is doing worse than 88.08% of the companies in the same industry.
NVS has a Quick Ratio of 0.82. This is a bad value and indicates that NVS is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of NVS (0.62) is worse than 87.56% 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 | 0.82 | ||
| Quick Ratio | 0.62 |
3. Growth
3.1 Past
NVS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 22.58%, which is quite impressive.
NVS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.14% yearly.
NVS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.24%.
NVS shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.24% yearly.
EPS 1Y (TTM)22.58%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%22.84%
Revenue 1Y (TTM)12.24%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%12.32%
3.2 Future
NVS is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.52% yearly.
NVS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.39% yearly.
EPS Next Y11.31%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
EPS Next 5Y6.52%
Revenue Next Year9.49%
Revenue Next 2Y5.85%
Revenue Next 3Y4.81%
Revenue Next 5Y3.39%
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 stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 12.82, the valuation of NVS can be described as correct.
NVS's Price/Earnings ratio is rather cheap when compared to the industry. NVS is cheaper than 86.53% of the companies in the same industry.
NVS's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.99.
The Price/Forward Earnings ratio is 12.37, which indicates a correct valuation of NVS.
NVS's Price/Forward Earnings ratio is rather cheap when compared to the industry. NVS is cheaper than 81.35% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 36.36. NVS is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.82 | ||
| Fwd PE | 12.37 |
4.2 Price Multiples
NVS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NVS is cheaper than 85.49% of the companies in the same industry.
87.56% of the companies in the same industry are more expensive than NVS, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.07 | ||
| EV/EBITDA | 10.41 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of NVS may justify a higher PE ratio.
PEG (NY)1.13
PEG (5Y)1.57
EPS Next 2Y7.7%
EPS Next 3Y7.64%
5. Dividend
5.1 Amount
NVS has a Yearly Dividend Yield of 3.72%. Purely for dividend investing, there may be better candidates out there.
NVS's Dividend Yield is rather good when compared to the industry average which is at 4.18. NVS pays more dividend than 94.30% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, NVS pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.72% |
5.2 History
The dividend of NVS has a limited annual growth rate of 5.49%.
NVS has been paying a dividend for at least 10 years, so it has a reliable track record.
As NVS did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)5.49%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
NVS pays out 57.26% of its income as dividend. This is a bit on the high side, but may be sustainable.
NVS's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP57.26%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
113.5
-4.23 (-3.59%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners34.27%
Inst Owner Change-0.77%
Ins Owners0.01%
Ins Owner ChangeN/A
Market Cap219.72B
Analysts68.75
Price Target129.87 (14.42%)
Short Float %0.24%
Short Ratio2.7
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.72% |
Yearly Dividend3.79
Dividend Growth(5Y)5.49%
DP57.26%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.43%
Min EPS beat(2)0.27%
Max EPS beat(2)6.59%
EPS beat(4)4
Avg EPS beat(4)4.17%
Min EPS beat(4)0.27%
Max EPS beat(4)6.59%
EPS beat(8)7
Avg EPS beat(8)2.72%
EPS beat(12)10
Avg EPS beat(12)3.59%
EPS beat(16)12
Avg EPS beat(16)2.71%
Revenue beat(2)0
Avg Revenue beat(2)-1.98%
Min Revenue beat(2)-2.83%
Max Revenue beat(2)-1.13%
Revenue beat(4)1
Avg Revenue beat(4)-1.12%
Min Revenue beat(4)-2.83%
Max Revenue beat(4)0.78%
Revenue beat(8)2
Avg Revenue beat(8)-1.36%
Revenue beat(12)3
Avg Revenue beat(12)-5.01%
Revenue beat(16)5
Avg Revenue beat(16)-3.81%
PT rev (1m)1.73%
PT rev (3m)0.82%
EPS NQ rev (1m)4.55%
EPS NQ rev (3m)5.77%
EPS NY rev (1m)1.05%
EPS NY rev (3m)1.05%
Revenue NQ rev (1m)2.18%
Revenue NQ rev (3m)6.7%
Revenue NY rev (1m)1.62%
Revenue NY rev (3m)2.9%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.82 | ||
| Fwd PE | 12.37 | ||
| P/S | 4.01 | ||
| P/FCF | 13.07 | ||
| P/OCF | 10.57 | ||
| P/B | 5.23 | ||
| P/tB | N/A | ||
| EV/EBITDA | 10.41 |
EPS(TTM)8.85
EY7.8%
EPS(NY)9.17
Fwd EY8.08%
FCF(TTM)8.68
FCFY7.65%
OCF(TTM)10.74
OCFY9.46%
SpS28.33
BVpS21.69
TBVpS-6.62
PEG (NY)1.13
PEG (5Y)1.57
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.08% | ||
| ROE | 32.52% | ||
| ROCE | 25.24% | ||
| ROIC | 22.91% | ||
| ROICexc | 25.24% | ||
| ROICexgc | 149.23% | ||
| OM | 33.45% | ||
| PM (TTM) | 24.9% | ||
| GM | 76.12% | ||
| FCFM | 30.64% |
ROA(3y)10.82%
ROA(5y)11.4%
ROE(3y)23.55%
ROE(5y)24.08%
ROIC(3y)14.58%
ROIC(5y)12.83%
ROICexc(3y)17.82%
ROICexc(5y)15.74%
ROICexgc(3y)90.48%
ROICexgc(5y)78.58%
ROCE(3y)16.96%
ROCE(5y)14.93%
ROICexcg growth 3Y14.29%
ROICexcg growth 5Y25.26%
ROICexc growth 3Y20.9%
ROICexc growth 5Y13.17%
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%
F-Score6
Asset Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.57 | ||
| Debt/FCF | 1.93 | ||
| Debt/EBITDA | 0.99 | ||
| Cap/Depr | 66.33% | ||
| Cap/Sales | 7.26% | ||
| Interest Coverage | 19.66 | ||
| Cash Conversion | 85.38% | ||
| Profit Quality | 123.09% | ||
| Current Ratio | 0.82 | ||
| Quick Ratio | 0.62 | ||
| Altman-Z | 3.78 |
F-Score6
WACC4.78%
ROIC/WACC4.79
Cap/Depr(3y)51.13%
Cap/Depr(5y)48.4%
Cap/Sales(3y)6.48%
Cap/Sales(5y)6.27%
Profit Quality(3y)120.24%
Profit Quality(5y)109.63%
High Growth Momentum
Growth
EPS 1Y (TTM)22.58%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%22.84%
EPS Next Y11.31%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
EPS Next 5Y6.52%
Revenue 1Y (TTM)12.24%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%12.32%
Revenue Next Year9.49%
Revenue Next 2Y5.85%
Revenue Next 3Y4.81%
Revenue Next 5Y3.39%
EBIT growth 1Y44.75%
EBIT growth 3Y14.18%
EBIT growth 5Y7.57%
EBIT Next Year30.73%
EBIT Next 3Y11.41%
EBIT Next 5Y9.7%
FCF growth 1Y32.64%
FCF growth 3Y4.49%
FCF growth 5Y3.96%
OCF growth 1Y35.29%
OCF growth 3Y5.34%
OCF growth 5Y5.28%