NASDAQ:ALKS: good value for what you're paying.

Last update: Nov 16, 2023

Our stock screener has spotted ALKERMES PLC (NASDAQ:ALKS) as an undervalued stock with solid fundamentals. NASDAQ:ALKS shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Analyzing Valuation Metrics

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NASDAQ:ALKS has achieved a 8 out of 10:

96.02% of the companies in the same industry are more expensive than ALKS, based on the Price/Earnings ratio.
ALKS's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.77.
The Price/Forward Earnings ratio is 11.97, which indicates a very decent valuation of ALKS.
Based on the Price/Forward Earnings ratio, ALKS is valued cheaper than 98.01% of the companies in the same industry.
ALKS's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 19.40.
ALKS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ALKS is cheaper than 96.68% of the companies in the same industry.
97.35% of the companies in the same industry are more expensive than ALKS, based on the Price/Free Cash Flow ratio.
ALKS's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ALKS has a very decent profitability rating, which 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.

Evaluating Profitability: 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:

The Return On Assets of ALKS (9.42%) is better than 96.85% of its industry peers.
ALKS has a Return On Equity of 15.84%. This is amongst the best in the industry. ALKS outperforms 96.85% of its industry peers.
ALKS's Return On Invested Capital of 9.83% is amongst the best of the industry. ALKS outperforms 96.35% of its industry peers.
Looking at the Profit Margin, with a value of 13.50%, ALKS belongs to the top of the industry, outperforming 96.35% of the companies in the same industry.
The Operating Margin of ALKS (13.89%) is better than 96.19% of its industry peers.
The Gross Margin of ALKS (85.11%) is better than 88.39% of its industry peers.

ChartMill's Evaluation of Health

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NASDAQ:ALKS scores a 6 out of 10:

ALKS has an Altman-Z score of 3.25. This indicates that ALKS is financially healthy and has little risk of bankruptcy at the moment.
ALKS has a better Altman-Z score (3.25) than 76.95% of its industry peers.
ALKS has a debt to FCF ratio of 1.15. This is a very positive value and a sign of high solvency as it would only need 1.15 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.15, ALKS belongs to the top of the industry, outperforming 95.85% of the companies in the same industry.
A Debt/Equity ratio of 0.21 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 2.91. This indicates that ALKS is financially healthy and has no problem in meeting its short term obligations.
A Quick Ratio of 2.53 indicates that ALKS has no problem at all paying its short term obligations.

Understanding NASDAQ:ALKS's Growth Score

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NASDAQ:ALKS has received a 8 out of 10:

ALKS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 211.63%, 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 40.56%.
ALKS is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 61.20% yearly.
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.