NASDAQ:ALKS, an undervalued stock with good fundamentals.

Last update: Oct 26, 2023

Our stock screening tool has identified ALKERMES PLC (NASDAQ:ALKS) as an undervalued gem with strong fundamentals. NASDAQ:ALKS boasts decent financial health and profitability while maintaining an attractive price point. We'll break it down further.

Evaluating Valuation: NASDAQ:ALKS

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NASDAQ:ALKS was assigned a score of 8 for valuation:

ALKS's Price/Earnings ratio is rather cheap when compared to the industry. ALKS is cheaper than 94.85% of the companies in the same industry.
A Price/Forward Earnings ratio of 11.84 indicates a reasonable valuation of ALKS.
97.67% of the companies in the same industry are more expensive than ALKS, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 18.34. ALKS is valued slightly cheaper when compared to this.
95.35% of the companies in the same industry are more expensive than ALKS, based on the Enterprise Value to EBITDA ratio.
ALKS's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ALKS is 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.
ALKS's earnings are expected to grow with 87.15% in the coming years. This may justify a more expensive valuation.

Profitability Examination for NASDAQ:ALKS

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 95.35% of the companies in the same industry.
ALKS has a Return On Equity of 8.04%. This is amongst the best in the industry. ALKS outperforms 95.52% of its industry peers.
ALKS has a better Return On Invested Capital (5.13%) than 95.85% of its industry peers.
ALKS's Profit Margin of 7.04% is amongst the best of the industry. ALKS outperforms 95.35% of its industry peers.
With an excellent Operating Margin value of 7.56%, ALKS belongs to the best of the industry, outperforming 95.35% of the companies in the same industry.
With an excellent Gross Margin value of 84.54%, ALKS belongs to the best of the industry, outperforming 88.54% of the companies in the same industry.

ChartMill's Evaluation of Health

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:ALKS has earned a 6 out of 10:

Looking at the Altman-Z score, with a value of 2.96, ALKS is in the better half of the industry, outperforming 77.41% of the companies in the same industry.
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.
With an excellent Debt to FCF ratio value of 1.84, ALKS belongs to the best of the industry, outperforming 95.85% of the companies in the same industry.
A Debt/Equity ratio of 0.23 indicates that ALKS is not too dependend on debt financing.
Even though the debt/equity ratio score it not favorable for ALKS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
ALKS has a Current Ratio of 2.87. This indicates that ALKS is financially healthy and has no problem in meeting 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 Growth

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NASDAQ:ALKS, the assigned 8 reflects its growth potential:

The Earnings Per Share has grown by an impressive 30.91% over the past year.
ALKS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 14.87% yearly.
The Revenue has grown by 24.60% in the past year. This is a very strong growth!
The Earnings Per Share is expected to grow by 61.20% on average over the next years. This is a very strong growth
Based on estimates for the next years, ALKS will show a quite strong growth in Revenue. The Revenue will grow by 11.68% on average per year.
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.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of ALKS contains the most current fundamental analsysis.

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.