While growth is established for NASDAQ:ALKS, the stock's valuation remains reasonable.

Last update: Oct 17, 2023

Consider ALKERMES PLC (NASDAQ:ALKS) as an affordable growth stock, identified by our stock screening tool. NASDAQ:ALKS is showcasing impressive growth figures and is well-positioned in terms of profitability, solvency, and liquidity. Moreover, it seems to be priced reasonably. Let's dive deeper into the analysis.

Analyzing Growth Metrics

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:ALKS has achieved a 8 out of 10:

ALKS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 30.91%, which is quite impressive.
Measured over the past years, ALKS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 14.87% on average per year.
ALKS shows a strong growth in Revenue. In the last year, the Revenue has grown by 24.60%.
The Earnings Per Share is expected to grow by 59.52% on average over the next years. This is a very strong growth
ALKS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.11% yearly.
The EPS growth rate is accelerating: in the next years the growth will be better 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.

Unpacking NASDAQ:ALKS's Valuation Rating

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:ALKS has received a 7 out of 10:

Compared to the rest of the industry, the Price/Earnings ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 94.69% of the companies listed in the same industry.
Based on the Price/Forward Earnings ratio, ALKS is valued cheaper than 97.84% of the companies in the same industry.
ALKS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 18.97, which is the current average of the S&P500 Index.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 95.19% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ALKS is valued cheaper than 96.35% of the companies in the same industry.
ALKS's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of ALKS may justify a higher PE ratio.
A more expensive valuation may be justified as ALKS's earnings are expected to grow with 92.02% in the coming years.

Unpacking NASDAQ:ALKS's Health Rating

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:ALKS, the assigned 6 reflects its health status:

ALKS has an Altman-Z score of 3.46. This indicates that ALKS is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ALKS (3.46) is better than 77.45% of its industry peers.
The Debt to FCF ratio of ALKS is 1.84, which is an excellent value as it means it would take ALKS, only 1.84 years of fcf income to pay off all of its debts.
ALKS has a better Debt to FCF ratio (1.84) than 95.85% of its industry peers.
ALKS has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
Although ALKS 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.
A Current Ratio of 2.87 indicates that ALKS has no problem at all paying its short term obligations.
A Quick Ratio of 2.48 indicates that ALKS has no problem at all paying its short term obligations.

Exploring NASDAQ:ALKS's Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:ALKS scores a 6 out of 10:

Looking at the Return On Assets, with a value of 4.71%, ALKS belongs to the top of the industry, outperforming 95.19% of the companies in the same industry.
ALKS has a better Return On Equity (8.04%) than 95.36% of its industry peers.
ALKS has a better Return On Invested Capital (5.13%) than 95.85% of its industry peers.
The Profit Margin of ALKS (7.04%) is better than 95.36% of its industry peers.
The Operating Margin of ALKS (7.56%) is better than 95.36% of its industry peers.
ALKS's Gross Margin of 84.54% is amongst the best of the industry. ALKS outperforms 88.56% of its industry peers.

More Affordable Growth stocks can be found in our Affordable Growth screener.

Check the latest full fundamental report of ALKS for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.