NOVARTIS AG-SPONSORED ADR (NVS)

US66987V1098 - ADR

96.73  +0.85 (+0.89%)

After market: 96 -0.73 (-0.75%)

Fundamental Rating

7

NVS gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 203 industry peers in the Pharmaceuticals industry. NVS scores excellent points on both the profitability and health parts. This is a solid base for a good stock. NVS is not valued too expensively and it also shows a decent growth rate.



9

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.
NVS had positive earnings in each of the past 5 years.
Each year in the past 5 years NVS had a positive operating cash flow.

1.2 Ratios

NVS has a Return On Assets of 17.15%. This is amongst the best in the industry. NVS outperforms 96.52% of its industry peers.
With an excellent Return On Equity value of 36.73%, NVS belongs to the best of the industry, outperforming 95.52% of the companies in the same industry.
NVS has a Return On Invested Capital of 19.33%. This is amongst the best in the industry. NVS outperforms 95.52% of its industry peers.
NVS had an Average Return On Invested Capital over the past 3 years of 11.23%. This is below the industry average of 16.07%.
The 3 year average ROIC (11.23%) for NVS is below the current ROIC(19.33%), indicating increased profibility in the last year.
Industry RankSector 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

Looking at the Profit Margin, with a value of 28.63%, NVS belongs to the top of the industry, outperforming 94.53% of the companies in the same industry.
NVS's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 26.64%, NVS belongs to the top of the industry, outperforming 93.53% of the companies in the same industry.
NVS's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 73.53%, NVS belongs to the top of the industry, outperforming 80.60% of the companies in the same industry.
In the last couple of years the Gross Margin of NVS has remained more or less at the same level.
Industry RankSector 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%

7

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 4.04. 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 4.04, NVS is in the better half of the industry, outperforming 78.61% of the companies in the same industry.
The Debt to FCF ratio of NVS is 2.25, which is a good value as it means it would take NVS, 2.25 years of fcf income to pay off all of its debts.
NVS has a Debt to FCF ratio of 2.25. This is amongst the best in the industry. NVS outperforms 93.53% of its industry peers.
A Debt/Equity ratio of 0.43 indicates that NVS is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.43, NVS is doing worse than 62.19% of the companies in the same industry.
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 RankSector Rank
Debt/Equity 0.43
Debt/FCF 2.25
Altman-Z 4.04
ROIC/WACC3.9
WACC4.96%

2.3 Liquidity

A Current Ratio of 1.16 indicates that NVS should not have too much problems paying its short term obligations.
The Current ratio of NVS (1.16) is worse than 83.08% of its industry peers.
A Quick Ratio of 0.93 indicates that NVS may have some problems paying its short term obligations.
The Quick ratio of NVS (0.93) is worse than 80.60% 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 RankSector Rank
Current Ratio 1.16
Quick Ratio 0.93

4

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.
Measured over the past years, NVS shows a small growth in Revenue. The Revenue has been growing by 0.28% on average per year.
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.
NVS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.58% yearly.
EPS Next Y2.89%
EPS Next 2Y6.41%
EPS Next 3Y7.01%
EPS Next 5Y2.92%
Revenue Next Year2.82%
Revenue Next 2Y3.47%
Revenue Next 3Y2.86%
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.
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.

6

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 13.82, 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 87.56% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 26.48, NVS is valued a bit cheaper.
NVS is valuated correctly with a Price/Forward Earnings ratio of 13.43.
NVS's Price/Forward Earnings ratio is rather cheap when compared to the industry. NVS is cheaper than 86.07% of the companies in the same industry.
NVS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.79, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 13.82
Fwd PE 13.43

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, NVS is valued cheaper than 90.55% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaply inside the industry as 85.07% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 16.89
EV/EBITDA 8.64

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates NVS does not grow enough to justify the current Price/Earnings ratio.
NVS has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)4.79
PEG (5Y)2.26
EPS Next 2Y6.41%
EPS Next 3Y7.01%

6

5. Dividend

5.1 Amount

NVS has a Yearly Dividend Yield of 3.81%.
NVS's Dividend Yield is rather good when compared to the industry average which is at 4.27. NVS pays more dividend than 95.02% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, NVS pays a better dividend.
Industry RankSector Rank
Dividend Yield 3.81%

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

NVS pays out 42.32% of its income as dividend. 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 2Y6.41%
EPS Next 3Y7.01%

NOVARTIS AG-SPONSORED ADR

NYSE:NVS (3/28/2024, 7:29:47 PM)

After market: 96 -0.73 (-0.75%)

96.73

+0.85 (+0.89%)

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 Cap197.72B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 3.81%
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
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EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
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 RankSector Rank
PE 13.82
Fwd PE 13.43
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)4.79
PEG (5Y)2.26
Profitability
Industry RankSector 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 RankSector 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 Y2.89%
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