NASDAQ:ALKS, an undervalued stock with good fundamentals.

Last update: Dec 10, 2024

Our stock screening tool has pinpointed ALKERMES PLC (NASDAQ:ALKS) as an undervalued stock option. NASDAQ:ALKS retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Unpacking NASDAQ:ALKS's Valuation Rating

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:ALKS, the assigned 8 reflects its valuation:

97.35% 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 29.37.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 95.94% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of ALKS to the average of the S&P500 Index (23.84), we can say ALKS is valued slightly cheaper.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 98.59% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ALKS is valued cheaper than 97.00% 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.
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 16.55% in the coming years.

How do we evaluate the Profitability 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 15.47%, ALKS belongs to the top of the industry, outperforming 98.06% of the companies in the same industry.
The Return On Equity of ALKS (25.80%) is better than 98.06% of its industry peers.
With an excellent Return On Invested Capital value of 20.27%, ALKS belongs to the best of the industry, outperforming 98.41% of the companies in the same industry.
The Profit Margin of ALKS (22.15%) is better than 97.53% of its industry peers.
Looking at the Operating Margin, with a value of 29.00%, ALKS belongs to the top of the industry, outperforming 98.41% of the companies in the same industry.
Looking at the Gross Margin, with a value of 83.17%, ALKS belongs to the top of the industry, outperforming 87.81% of the companies in the same industry.

ChartMill's Evaluation of Health

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 7 reflects its health status:

ALKS has an Altman-Z score of 4.78. This indicates that ALKS is financially healthy and has little risk of bankruptcy at the moment.
ALKS has a better Altman-Z score (4.78) than 77.74% of its industry peers.
ALKS has a debt to FCF ratio of 0.92. This is a very positive value and a sign of high solvency as it would only need 0.92 years to pay back of all of its debts.
ALKS's Debt to FCF ratio of 0.92 is amongst the best of the industry. ALKS outperforms 96.11% of its industry peers.
A Debt/Equity ratio of 0.22 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.
A Current Ratio of 3.45 indicates that ALKS has no problem at all paying its short term obligations.
ALKS has a Quick Ratio of 3.03. This indicates that ALKS is financially healthy and has no problem in meeting its short term obligations.

Evaluating Growth: NASDAQ:ALKS

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 4 reflects its growth potential:

ALKS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 54.48%, 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.
Measured over the past years, ALKS shows a quite strong growth in Revenue. The Revenue has been growing by 8.74% on average per year.

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

For an up to date full fundamental analysis you can check the fundamental report of ALKS

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.