When you look at NASDAQ:ALKS, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

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.

Looking at the Valuation

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 9 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 98.43% of the companies listed in the same industry.
• When comparing the Price/Earnings ratio of ALKS to the average of the S&P500 Index (28.73), we can say ALKS is valued rather cheaply.
• ALKS is valuated reasonably with a Price/Forward Earnings ratio of 9.23.
• Based on the Price/Forward Earnings ratio, ALKS is valued cheaply inside the industry as 97.91% of the companies are valued more expensively.
• Compared to an average S&P500 Price/Forward Earnings ratio of 20.21, ALKS is valued rather cheaply.
• Based on the Enterprise Value to EBITDA ratio, ALKS is valued cheaply inside the industry as 98.60% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 99.13% of the companies listed in the same industry.
• The 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.
• A more expensive valuation may be justified as ALKS's earnings are expected to grow with 24.42% in the coming years.

Profitability Assessment of 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 (20.46%) is better than 98.95% of its industry peers.
• The Return On Equity of ALKS (34.63%) is better than 98.60% of its industry peers.
• The Return On Invested Capital of ALKS (24.24%) is better than 98.95% of its industry peers.
• ALKS has a Profit Margin of 25.17%. This is amongst the best in the industry. ALKS outperforms 98.25% of its industry peers.
• ALKS's Operating Margin of 29.60% is amongst the best of the industry. ALKS outperforms 98.43% of its industry peers.
• ALKS has a better Gross Margin (85.31%) than 89.53% of its industry peers.

Exploring NASDAQ:ALKS's Health

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:ALKS has received a 7 out of 10:

• An Altman-Z score of 4.17 indicates that ALKS is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 4.17, ALKS is in the better half of the industry, outperforming 78.01% of the companies in the same industry.
• ALKS has a debt to FCF ratio of 0.74. This is a very positive value and a sign of high solvency as it would only need 0.74 years to pay back of all of its debts.
• The Debt to FCF ratio of ALKS (0.74) is better than 96.51% 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.
• 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.
• A Current Ratio of 3.20 indicates that ALKS has no problem at all paying its short term obligations.
• A Quick Ratio of 2.77 indicates that ALKS has no problem at all paying its short term obligations.

A Closer Look at Growth for NASDAQ:ALKS

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:ALKS was assigned a score of 5 for growth:

• ALKS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 700.00%, 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 18.41% on average per year.
• The Revenue has grown by 54.00% in the past year. This is a very strong growth!
• ALKS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.74% yearly.
• Based on estimates for the next years, ALKS will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.51% on average per year.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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

Disclaimer

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.