NOVARTIS AG-SPONSORED ADR (NVS) Stock Fundamental Analysis
NYSE:NVS - New York Stock Exchange, Inc. - US66987V1098 - ADR - Currency: USD
We assign a fundamental rating of 7 out of 10 to NVS. NVS was compared to 198 industry peers in the Pharmaceuticals industry. NVS gets an excellent profitability rating and is at the same time showing great financial health properties. A decent growth rate in combination with a cheap valuation! Better keep an eye on NVS. These ratings could make NVS a good candidate for value and quality investing.
1. Profitability
1.1 Basic Checks
NVS had positive earnings in the past year.
NVS had a positive operating cash flow in the past year.
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
NVS has a Return On Assets of 12.87%. This is amongst the best in the industry. NVS outperforms 94.95% of its industry peers.
Looking at the Return On Equity, with a value of 33.51%, NVS belongs to the top of the industry, outperforming 95.96% of the companies in the same industry.
NVS's Return On Invested Capital of 23.17% is amongst the best of the industry. NVS outperforms 95.96% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NVS is significantly below the industry average of 42.34%.
The last Return On Invested Capital (23.17%) for NVS is above the 3 year average (14.58%), which is a sign of increasing profitability.
| 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
NVS has a better Profit Margin (24.15%) than 94.95% of its industry peers.
NVS's Profit Margin has been stable in the last couple of years.
The Operating Margin of NVS (32.76%) is better than 94.44% of its industry peers.
In the last couple of years the Operating Margin of NVS has grown nicely.
NVS has a better Gross Margin (75.69%) than 82.83% 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 | 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.
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 3.72. This indicates that NVS is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.72, NVS is in the better half of the industry, outperforming 78.79% of the companies in the same industry.
NVS has a debt to FCF ratio of 2.10. This is a good value and a sign of high solvency as NVS would need 2.10 years to pay back of all of its debts.
NVS has a better Debt to FCF ratio (2.10) than 93.43% 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.
With a Debt to Equity ratio value of 0.61, NVS is not doing good in the industry: 62.63% of the companies in the same industry are doing better.
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 | 0.61 | ||
| Debt/FCF | 2.1 | ||
| Altman-Z | 3.72 |
ROIC/WACC4.92
WACC4.71%
2.3 Liquidity
NVS has a Current 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's Current ratio of 0.79 is on the low side compared to the rest of the industry. NVS is outperformed by 87.37% of its industry peers.
A Quick Ratio of 0.61 indicates that NVS may have some problems paying its short term obligations.
NVS's Quick ratio of 0.61 is on the low side compared to the rest of the industry. NVS is outperformed by 86.36% of its industry peers.
The current and quick ratio evaluation for NVS is rather negative, while it does have 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
NVS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.60%, which is quite good.
The Earnings Per Share has been growing by 8.14% on average over the past years. This is quite good.
NVS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.57%.
Measured over the past years, NVS shows a small growth in Revenue. The Revenue has been growing by 1.24% on average per year.
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
The Earnings Per Share is expected to grow by 4.47% on average over the next years.
The Revenue is expected to grow by 2.73% on average over the next years.
EPS Next Y11.31%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
EPS Next 5Y4.47%
Revenue Next Year7.74%
Revenue Next 2Y4.8%
Revenue Next 3Y4.01%
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 13.56, 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 87.37% of the companies in the same industry.
NVS's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.91.
The Price/Forward Earnings ratio is 12.42, 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 83.84% of the companies in the same industry.
NVS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.85, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.56 | ||
| Fwd PE | 12.42 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NVS indicates a rather cheap valuation: NVS is cheaper than 84.34% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaper than 86.36% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.99 | ||
| EV/EBITDA | 10.54 |
4.3 Compensation for Growth
NVS's 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)1.2
PEG (5Y)1.67
EPS Next 2Y7.7%
EPS Next 3Y7.64%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.87%, 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 4.24. NVS pays more dividend than 94.44% of the companies in the same industry.
NVS's Dividend Yield is rather good when compared to the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.87% |
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.
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%
NYSE:NVS (5/23/2025, 2:41:08 PM)
112.705
+0.2 (+0.18%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners38.54%
Inst Owner Change5.24%
Ins Owners0.01%
Ins Owner ChangeN/A
Market Cap222.60B
Analysts68.13
Price Target127.05 (12.73%)
Short Float %0.27%
Short Ratio1.86
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.87% |
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)6.55%
PT rev (3m)8.4%
EPS NQ rev (1m)2.23%
EPS NQ rev (3m)4.89%
EPS NY rev (1m)-1.44%
EPS NY rev (3m)4.58%
Revenue NQ rev (1m)1.66%
Revenue NQ rev (3m)3.46%
Revenue NY rev (1m)2.74%
Revenue NY rev (3m)3.57%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.56 | ||
| Fwd PE | 12.42 | ||
| P/S | 4.18 | ||
| P/FCF | 14.99 | ||
| P/OCF | 11.72 | ||
| P/B | 5.8 | ||
| P/tB | N/A | ||
| EV/EBITDA | 10.54 |
EPS(TTM)8.31
EY7.37%
EPS(NY)9.08
Fwd EY8.05%
FCF(TTM)7.52
FCFY6.67%
OCF(TTM)9.62
OCFY8.53%
SpS26.96
BVpS19.43
TBVpS-7.12
PEG (NY)1.2
PEG (5Y)1.67
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 | 3.72 |
F-Score6
WACC4.71%
ROIC/WACC4.92
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 Year7.74%
Revenue Next 2Y4.8%
Revenue Next 3Y4.01%
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%