Despite its impressive fundamentals, NASDAQ:ALKS remains undervalued.

ALKERMES PLC (NASDAQ:ALKS) was identified as a decent value stock by our stock screener. NASDAQ:ALKS scores well on profitability, solvency and liquidity. At the same time it seems to be priced very reasonably. We'll explore this a bit deeper below.

Unpacking NASDAQ:ALKS's Valuation Rating

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:

• Compared to the rest of the industry, the Price/Earnings ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 97.15% of the companies listed in the same industry.
• ALKS is valuated rather cheaply when we compare the Price/Earnings ratio to 27.18, which is the current average of the S&P500 Index.
• Based on the Price/Forward Earnings ratio, ALKS is valued cheaper than 96.26% of the companies in the same industry.
• Compared to an average S&P500 Price/Forward Earnings ratio of 23.59, ALKS is valued a bit cheaper.
• ALKS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ALKS is cheaper than 98.93% of the companies in the same industry.
• 97.15% 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.
• 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 16.55% in the coming years.

Looking at the Profitability

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:ALKS, the assigned 6 is noteworthy for profitability:

• ALKS has a better Return On Assets (15.47%) than 97.68% of its industry peers.
• Looking at the Return On Equity, with a value of 25.80%, ALKS belongs to the top of the industry, outperforming 98.04% of the companies in the same industry.
• With an excellent Return On Invested Capital value of 20.27%, ALKS belongs to the best of the industry, outperforming 98.40% of the companies in the same industry.
• Looking at the Profit Margin, with a value of 22.15%, ALKS belongs to the top of the industry, outperforming 97.15% of the companies in the same industry.
• The Operating Margin of ALKS (29.00%) is better than 98.22% of its industry peers.
• Looking at the Gross Margin, with a value of 83.17%, ALKS belongs to the top of the industry, outperforming 87.70% of the companies in the same industry.

Understanding 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:

• ALKS has an Altman-Z score of 4.49. This indicates that ALKS is financially healthy and has little risk of bankruptcy at the moment.
• The Altman-Z score of ALKS (4.49) is better than 79.32% of its industry peers.
• The Debt to FCF ratio of ALKS is 0.92, which is an excellent value as it means it would take ALKS, only 0.92 years of fcf income to pay off all of its debts.
• Looking at the Debt to FCF ratio, with a value of 0.92, ALKS belongs to the top of the industry, outperforming 95.90% of the companies in the same industry.
• ALKS has a Debt/Equity ratio of 0.22. 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.
• ALKS has a Current Ratio of 3.45. This indicates that ALKS is financially healthy and has no problem in meeting 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.

Growth Insights: 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 4 for growth:

• 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.
• The Earnings Per Share has been growing by 18.41% on average over the past years. This is quite good.
• 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.

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.

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.