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 With these ratings, NVS could be worth investigating further 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.
NVS had positive earnings in each of the past 5 years.
In the past 5 years NVS always reported a positive cash flow from operatings.
1.2 Ratios
NVS has a Return On Assets of 12.87%. This is amongst the best in the industry. NVS outperforms 95.45% of its industry peers.
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 41.51%.
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
Looking at the Profit Margin, with a value of 24.15%, NVS belongs to the top of the industry, outperforming 94.95% of the companies in the same industry.
NVS's Profit Margin has been stable in the last couple of years.
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.
NVS has a Gross Margin of 75.69%. This is amongst the best in the industry. NVS outperforms 83.33% of its industry peers.
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.
Compared to 1 year ago, NVS has less shares outstanding
The number of shares outstanding for NVS has been reduced compared to 5 years ago.
NVS has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.61 indicates that NVS is not in any danger for bankruptcy at the moment.
NVS has a Altman-Z score of 3.61. This is in the better half of the industry: NVS outperforms 78.28% of its industry peers.
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 Debt to FCF ratio of 2.10. This is amongst the best in the industry. NVS outperforms 93.43% of its industry peers.
A Debt/Equity ratio of 0.61 indicates that NVS is somewhat dependend on debt financing.
NVS has a Debt to Equity ratio of 0.61. This is in the lower half of the industry: NVS underperforms 63.13% 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 | 0.61 | ||
| Debt/FCF | 2.1 | ||
| Altman-Z | 3.61 |
ROIC/WACC4.78
WACC4.85%
2.3 Liquidity
A Current Ratio of 0.79 indicates that NVS may have some problems paying its short term obligations.
NVS has a Current ratio of 0.79. This is amonst the worse of the industry: NVS underperforms 87.88% of its industry peers.
A Quick Ratio of 0.61 indicates that NVS may have some problems paying 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.
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.
The Revenue has grown by 11.57% in the past year. This is quite good.
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
Based on estimates for the next years, NVS will show a small growth in Earnings Per Share. The EPS will grow by 4.47% on average per year.
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
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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
A Price/Earnings ratio of 12.63 indicates a correct valuation of NVS.
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.
When comparing the Price/Earnings ratio of NVS to the average of the S&P500 Index (24.85), we can say NVS is valued slightly cheaper.
The Price/Forward Earnings ratio is 11.57, which indicates a very decent valuation of NVS.
Based on the Price/Forward Earnings ratio, NVS is valued cheaper than 86.36% of the companies in the same industry.
NVS's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.89.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.63 | ||
| Fwd PE | 11.57 |
4.2 Price Multiples
NVS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NVS is cheaper than 84.85% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaper than 87.88% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.97 | ||
| EV/EBITDA | 10.06 |
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)1.12
PEG (5Y)1.55
EPS Next 2Y7.7%
EPS Next 3Y7.64%
5. Dividend
5.1 Amount
NVS has a Yearly Dividend Yield of 3.84%. 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 4.19. NVS pays more dividend than 94.44% 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 | 3.84% |
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%
104.99
-1.84 (-1.72%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners38.54%
Inst Owner Change-1.72%
Ins Owners0.01%
Ins Owner ChangeN/A
Market Cap207.36B
Analysts68.13
Price Target127.05 (21.01%)
Short Float %0.27%
Short Ratio1.86
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.84% |
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)6.18%
EPS NY rev (1m)-0.56%
EPS NY rev (3m)5.86%
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 | 12.63 | ||
| Fwd PE | 11.57 | ||
| P/S | 3.89 | ||
| P/FCF | 13.97 | ||
| P/OCF | 10.91 | ||
| P/B | 5.4 | ||
| P/tB | N/A | ||
| EV/EBITDA | 10.06 |
EPS(TTM)8.31
EY7.92%
EPS(NY)9.08
Fwd EY8.65%
FCF(TTM)7.52
FCFY7.16%
OCF(TTM)9.62
OCFY9.16%
SpS26.96
BVpS19.43
TBVpS-7.12
PEG (NY)1.12
PEG (5Y)1.55
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 | 3.61 |
F-Score6
WACC4.85%
ROIC/WACC4.78
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%