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 198 industry peers in the Pharmaceuticals industry. NVS gets an excellent profitability rating and is at the same time showing great financial health properties. NVS may be a bit undervalued, certainly considering the very reasonable score on growth These ratings could make NVS a good candidate for value and quality investing.
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.
NVS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 12.87%, NVS belongs to the top of the industry, outperforming 94.95% of the companies in the same industry.
NVS's Return On Equity of 33.51% is amongst the best of the industry. NVS outperforms 95.96% of its industry peers.
NVS has a better Return On Invested Capital (23.17%) than 95.45% of its industry peers.
NVS had an Average Return On Invested Capital over the past 3 years of 14.58%. This is significantly below the industry average of 41.67%.
The 3 year average ROIC (14.58%) for NVS is below the current ROIC(23.17%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.87% | ||
| ROE | 33.51% | ||
| ROIC | 23.17% |
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
Looking at the Profit Margin, with a value of 24.15%, NVS belongs to the top of the industry, outperforming 95.45% of the companies in the same industry.
In the last couple of years the Profit Margin of NVS has remained more or less at the same level.
NVS has a Operating Margin of 32.76%. This is amongst the best in the industry. NVS outperforms 94.44% of its industry peers.
NVS's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 75.69%, NVS belongs to the top of the industry, outperforming 82.83% of the companies in the same industry.
NVS's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 32.76% | ||
| PM (TTM) | 24.15% | ||
| GM | 75.69% |
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.
NVS has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, NVS has less shares outstanding
Compared to 1 year ago, NVS has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 3.70 indicates that NVS is not in any danger for bankruptcy at the moment.
The Altman-Z score of NVS (3.70) is better than 78.28% of its industry peers.
The Debt to FCF ratio of NVS is 2.10, which is a good value as it means it would take NVS, 2.10 years of fcf income to pay off all of its debts.
NVS has a better Debt to FCF ratio (2.10) than 92.42% of its industry peers.
NVS has a Debt/Equity ratio of 0.61. This is a neutral value indicating NVS is somewhat dependend on debt financing.
NVS's Debt to Equity ratio of 0.61 is on the low side compared to the rest of the industry. NVS is outperformed by 63.13% of its industry peers.
Even though the debt/equity ratio score it not favorable for NVS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.61 | ||
| Debt/FCF | 2.1 | ||
| Altman-Z | 3.7 |
ROIC/WACC4.75
WACC4.88%
2.3 Liquidity
A Current Ratio of 0.79 indicates that NVS may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.79, NVS is doing worse than 86.87% of the companies in the same industry.
NVS has a Quick Ratio of 0.79. 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 Quick ratio of 0.61. This is amonst the worse of the industry: NVS underperforms 86.87% 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 | 0.79 | ||
| Quick Ratio | 0.61 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 18.60% over the past year.
The Earnings Per Share has been growing by 8.14% on average over the past years. This is quite good.
The Revenue has grown by 11.57% in the past year. This is quite good.
The Revenue has been growing slightly by 1.24% on average over the past years.
EPS 1Y (TTM)18.6%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%26.67%
Revenue 1Y (TTM)11.57%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%11.87%
3.2 Future
NVS is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 4.47% yearly.
NVS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.73% yearly.
EPS Next Y11.31%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
EPS Next 5Y4.47%
Revenue Next Year6.4%
Revenue Next 2Y4.21%
Revenue Next 3Y3.63%
Revenue Next 5Y2.73%
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 accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 13.75, the valuation of NVS can be described as correct.
Based on the Price/Earnings ratio, NVS is valued cheaper than 87.37% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.22, NVS is valued rather cheaply.
NVS is valuated correctly with a Price/Forward Earnings ratio of 12.59.
Based on the Price/Forward Earnings ratio, NVS is valued cheaply inside the industry as 86.36% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 20.86. NVS is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.75 | ||
| Fwd PE | 12.59 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NVS is valued cheaply inside the industry as 83.33% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NVS indicates a rather cheap valuation: NVS is cheaper than 86.36% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.2 | ||
| EV/EBITDA | 10.44 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
NVS has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.22
PEG (5Y)1.69
EPS Next 2Y7.7%
EPS Next 3Y7.64%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.73%, NVS has a reasonable but not impressive dividend return.
NVS's Dividend Yield is rather good when compared to the industry average which is at 4.25. NVS pays more dividend than 94.44% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.44, NVS pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.73% |
5.2 History
The dividend of NVS has a limited annual growth rate of 5.49%.
NVS has paid a dividend for at least 10 years, which is a reliable track record.
NVS has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)5.49%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
NVS pays out 60.27% of its income as dividend. This is not a sustainable payout ratio.
NVS's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP60.27%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
114.29
+2.96 (+2.66%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners38.54%
Inst Owner Change0.36%
Ins Owners0.01%
Ins Owner ChangeN/A
Market Cap225.73B
Analysts68.13
Price Target128.81 (12.7%)
Short Float %0.27%
Short Ratio1.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.73% |
Yearly Dividend3.79
Dividend Growth(5Y)5.49%
DP60.27%
Div Incr Years4
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.32%
Min EPS beat(2)6.06%
Max EPS beat(2)6.59%
EPS beat(4)4
Avg EPS beat(4)4.92%
Min EPS beat(4)3.24%
Max EPS beat(4)6.59%
EPS beat(8)7
Avg EPS beat(8)3.4%
EPS beat(12)10
Avg EPS beat(12)3.74%
EPS beat(16)12
Avg EPS beat(16)3.05%
Revenue beat(2)1
Avg Revenue beat(2)-0.17%
Min Revenue beat(2)-1.13%
Max Revenue beat(2)0.78%
Revenue beat(4)1
Avg Revenue beat(4)-0.61%
Min Revenue beat(4)-1.32%
Max Revenue beat(4)0.78%
Revenue beat(8)3
Avg Revenue beat(8)-0.91%
Revenue beat(12)4
Avg Revenue beat(12)0.7%
Revenue beat(16)6
Avg Revenue beat(16)-3.38%
PT rev (1m)10.13%
PT rev (3m)9.25%
EPS NQ rev (1m)2.93%
EPS NQ rev (3m)-0.9%
EPS NY rev (1m)0.9%
EPS NY rev (3m)4.67%
Revenue NQ rev (1m)1.08%
Revenue NQ rev (3m)3.65%
Revenue NY rev (1m)1.46%
Revenue NY rev (3m)2.28%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.75 | ||
| Fwd PE | 12.59 | ||
| P/S | 4.24 | ||
| P/FCF | 15.2 | ||
| P/OCF | 11.88 | ||
| P/B | 5.88 | ||
| P/tB | N/A | ||
| EV/EBITDA | 10.44 |
EPS(TTM)8.31
EY7.27%
EPS(NY)9.08
Fwd EY7.94%
FCF(TTM)7.52
FCFY6.58%
OCF(TTM)9.62
OCFY8.42%
SpS26.96
BVpS19.43
TBVpS-7.12
PEG (NY)1.22
PEG (5Y)1.69
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.87% | ||
| ROE | 33.51% | ||
| ROCE | 25.54% | ||
| ROIC | 23.17% | ||
| ROICexc | 25.87% | ||
| ROICexgc | 181.05% | ||
| OM | 32.76% | ||
| PM (TTM) | 24.15% | ||
| GM | 75.69% | ||
| FCFM | 27.88% |
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 | 0.61 | ||
| Debt/FCF | 2.1 | ||
| Debt/EBITDA | 0.99 | ||
| Cap/Depr | 70.27% | ||
| Cap/Sales | 7.8% | ||
| Interest Coverage | 18.56 | ||
| Cash Conversion | 81.35% | ||
| Profit Quality | 115.46% | ||
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.61 | ||
| Altman-Z | 3.7 |
F-Score6
WACC4.88%
ROIC/WACC4.75
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)18.6%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%26.67%
EPS Next Y11.31%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
EPS Next 5Y4.47%
Revenue 1Y (TTM)11.57%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%11.87%
Revenue Next Year6.4%
Revenue Next 2Y4.21%
Revenue Next 3Y3.63%
Revenue Next 5Y2.73%
EBIT growth 1Y54.44%
EBIT growth 3Y14.18%
EBIT growth 5Y7.57%
EBIT Next Year30.47%
EBIT Next 3Y12.19%
EBIT Next 5Y8.66%
FCF growth 1Y11.95%
FCF growth 3Y4.49%
FCF growth 5Y3.96%
OCF growth 1Y22.23%
OCF growth 3Y5.34%
OCF growth 5Y5.28%