While growth is established for NYSE:NVO, the stock's valuation remains reasonable.

Discover NOVO-NORDISK A/S-SPONS ADR (NYSE:NVO), an undervalued growth gem identified by our stock screener. NYSE:NVO is shining in terms of growth metrics, and it's also displaying strong financial health and profitability. What's more, it retains an appealing valuation. We'll break it down further.

Growth Analysis for NYSE:NVO

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 NYSE:NVO, the assigned 7 reflects its growth potential:

• The Earnings Per Share has grown by an impressive 26.95% over the past year.
• Looking at the last year, NVO shows a very strong growth in Revenue. The Revenue has grown by 26.15%.
• The Revenue has been growing by 15.74% on average over the past years. This is quite good.
• The Earnings Per Share is expected to grow by 16.72% on average over the next years. This is quite good.
• The Revenue is expected to grow by 14.87% on average over the next years. This is quite good.
• When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Valuation Insights: NYSE:NVO

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:NVO scores a 6 out of 10:

• NVO's Price/Earnings ratio is rather cheap when compared to the industry. NVO is cheaper than 80.95% of the companies in the same industry.
• 79.37% of the companies in the same industry are more expensive than NVO, based on the Price/Forward Earnings ratio.
• NVO's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NVO is cheaper than 80.42% of the companies in the same industry.
• NVO's Price/Free Cash Flow ratio is rather cheap when compared to the industry. NVO is cheaper than 80.42% of the companies in the same industry.
• The excellent profitability rating of NVO may justify a higher PE ratio.
• NVO's earnings are expected to grow with 23.39% in the coming years. This may justify a more expensive valuation.

How We Gauge Health for NYSE:NVO

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. NYSE:NVO scores a 7 out of 10:

• An Altman-Z score of 8.11 indicates that NVO is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 8.11, NVO belongs to the top of the industry, outperforming 85.71% of the companies in the same industry.
• The Debt to FCF ratio of NVO is 0.85, which is an excellent value as it means it would take NVO, only 0.85 years of fcf income to pay off all of its debts.
• NVO has a better Debt to FCF ratio (0.85) than 96.30% of its industry peers.
• A Debt/Equity ratio of 0.43 indicates that NVO is not too dependend on debt financing.
• Although NVO 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.
• NVO does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Looking at the Profitability

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. NYSE:NVO scores a 9 out of 10:

• Looking at the Return On Assets, with a value of 23.83%, NVO belongs to the top of the industry, outperforming 98.94% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 78.59%, NVO belongs to the top of the industry, outperforming 98.41% of the companies in the same industry.
• NVO's Return On Invested Capital of 52.61% is amongst the best of the industry. NVO outperforms 98.94% of its industry peers.
• Measured over the past 3 years, the Average Return On Invested Capital for NVO is significantly above the industry average of 43.18%.
• The 3 year average ROIC (50.71%) for NVO is below the current ROIC(52.61%), indicating increased profibility in the last year.
• The Profit Margin of NVO (35.01%) is better than 96.83% of its industry peers.
• NVO has a better Operating Margin (45.85%) than 98.41% of its industry peers.
• NVO has a better Gross Margin (84.66%) than 91.01% of its industry peers.

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

Our latest full fundamental report of NVO contains the most current fundamental analsysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.