While growth is established for NASDAQ:HRMY, the stock's valuation remains reasonable.

Last update: Nov 3, 2023

HARMONY BIOSCIENCES HOLDINGS (NASDAQ:HRMY) was identified as an affordable growth stock by our stock screener. NASDAQ:HRMY is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

Evaluating Growth: NASDAQ:HRMY

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:HRMY has achieved a 8 out of 10:

HRMY shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 210.81%, which is quite impressive.
The Revenue has grown by 36.94% in the past year. This is a very strong growth!
The Revenue has been growing by 317.89% on average over the past years. This is a very strong growth!
Based on estimates for the next years, HRMY will show a quite strong growth in Earnings Per Share. The EPS will grow by 17.61% on average per year.
Based on estimates for the next years, HRMY will show a very strong growth in Revenue. The Revenue will grow by 24.61% on average per year.

Looking at the Valuation

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:HRMY has earned a 8 for valuation:

The Price/Earnings ratio is 7.14, which indicates a rather cheap valuation of HRMY.
Based on the Price/Earnings ratio, HRMY is valued cheaply inside the industry as 90.29% of the companies are valued more expensively.
HRMY is valuated cheaply when we compare the Price/Earnings ratio to 23.73, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 7.63 indicates a rather cheap valuation of HRMY.
91.26% of the companies in the same industry are more expensive than HRMY, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 18.67, HRMY is valued rather cheaply.
HRMY's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. HRMY is cheaper than 91.75% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HRMY indicates a rather cheap valuation: HRMY is cheaper than 94.66% of the companies listed in the same industry.
HRMY has a very decent profitability rating, which may justify a higher PE ratio.
HRMY's earnings are expected to grow with 12.24% in the coming years. This may justify a more expensive valuation.

Unpacking NASDAQ:HRMY's Health Rating

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:HRMY was assigned a score of 8 for health:

HRMY has an Altman-Z score of 4.69. This indicates that HRMY is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of HRMY (4.69) is better than 82.04% of its industry peers.
The Debt to FCF ratio of HRMY is 1.19, which is an excellent value as it means it would take HRMY, only 1.19 years of fcf income to pay off all of its debts.
HRMY has a Debt to FCF ratio of 1.19. This is amongst the best in the industry. HRMY outperforms 94.17% of its industry peers.
HRMY has a Debt/Equity ratio of 0.37. This is a healthy value indicating a solid balance between debt and equity.
Although HRMY does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
A Current Ratio of 4.90 indicates that HRMY has no problem at all paying its short term obligations.
HRMY has a Current ratio of 4.90. This is in the better half of the industry: HRMY outperforms 61.16% of its industry peers.
HRMY has a Quick Ratio of 4.84. This indicates that HRMY is financially healthy and has no problem in meeting its short term obligations.
HRMY's Quick ratio of 4.84 is fine compared to the rest of the industry. HRMY outperforms 63.59% of its industry peers.

Profitability Insights: NASDAQ:HRMY

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:HRMY has achieved a 7:

HRMY has a Return On Assets of 26.34%. This is amongst the best in the industry. HRMY outperforms 97.57% of its industry peers.
HRMY has a Return On Equity of 41.27%. This is amongst the best in the industry. HRMY outperforms 94.17% of its industry peers.
With an excellent Return On Invested Capital value of 17.39%, HRMY belongs to the best of the industry, outperforming 93.69% of the companies in the same industry.
The last Return On Invested Capital (17.39%) for HRMY is above the 3 year average (12.91%), which is a sign of increasing profitability.
HRMY has a Profit Margin of 40.14%. This is amongst the best in the industry. HRMY outperforms 97.09% of its industry peers.
With an excellent Operating Margin value of 29.44%, HRMY belongs to the best of the industry, outperforming 94.66% of the companies in the same industry.
Looking at the Gross Margin, with a value of 80.83%, HRMY belongs to the top of the industry, outperforming 85.44% of the companies in the same industry.
HRMY's Gross Margin has improved in the last couple of years.

More Affordable Growth stocks can be found in our Affordable Growth screener.

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

Keep in mind

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.