Investors should take notice of NYSE:NVO—it offers a great deal for the fundamentals it presents.

Our stock screener has spotted NOVO-NORDISK A/S-SPONS ADR (NYSE:NVO) as an undervalued stock with solid fundamentals. NYSE:NVO shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Understanding NYSE:NVO's Valuation Score

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. NYSE:NVO has earned a 7 for valuation:

• Based on the Price/Earnings ratio, NVO is valued cheaper than 81.72% of the companies in the same industry.
• Based on the Price/Forward Earnings ratio, NVO is valued cheaper than 80.11% of the companies in the same industry.
• NVO's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 93.88.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 80.65% of the companies listed in the same industry.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 80.65% of the companies listed in the same industry.
• The excellent profitability rating of NVO may justify a higher PE ratio.
• NVO's earnings are expected to grow with 23.35% in the coming years. This may justify a more expensive valuation.

Profitability Examination for NYSE:NVO

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 NYSE:NVO, the assigned 9 is noteworthy for profitability:

• With an excellent Return On Assets value of 23.83%, NVO belongs to the best of the industry, outperforming 98.92% of the companies in the same industry.
• With an excellent Return On Equity value of 78.59%, NVO belongs to the best of the industry, outperforming 98.92% of the companies in the same industry.
• The Return On Invested Capital of NVO (52.61%) is better than 98.92% 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 43.99%.
• The 3 year average ROIC (50.71%) for NVO is below the current ROIC(52.61%), indicating increased profibility in the last year.
• NVO's Profit Margin of 35.01% is amongst the best of the industry. NVO outperforms 96.77% of its industry peers.
• With an excellent Operating Margin value of 45.85%, NVO belongs to the best of the industry, outperforming 98.39% of the companies in the same industry.
• NVO's Gross Margin of 84.66% is amongst the best of the industry. NVO outperforms 90.86% of its industry peers.

Health Analysis for NYSE:NVO

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:NVO, the assigned 7 for health provides valuable insights:

• An Altman-Z score of 7.98 indicates that NVO is not in any danger for bankruptcy at the moment.
• NVO has a better Altman-Z score (7.98) than 84.41% of its industry peers.
• NVO has a debt to FCF ratio of 0.85. This is a very positive value and a sign of high solvency as it would only need 0.85 years to pay back of all of its debts.
• Looking at the Debt to FCF ratio, with a value of 0.85, NVO belongs to the top of the industry, outperforming 95.70% of the companies in the same industry.
• NVO has a Debt/Equity ratio of 0.43. This is a healthy value indicating a solid balance between debt and equity.
• 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.
• The current and quick ratio evaluation for NVO is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

A Closer Look at Growth 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 26.83% over the past year.
• Looking at the last year, NVO shows a very strong growth in Revenue. The Revenue has grown by 26.15%.
• NVO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 15.74% yearly.
• The Earnings Per Share is expected to grow by 16.88% on average over the next years. This is quite good.
• NVO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.14% yearly.
• The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

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

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

Keep in mind

This article should in no way be interpreted as advice. 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.