NYSE:NVO is showing good growth, while it is not too expensive.

Take a closer look at NOVO-NORDISK A/S-SPONS ADR (NYSE:NVO), an affordable growth stock uncovered by our stock screener. NYSE:NVO boasts strong growth prospects and excels in financial health indicators, all while maintaining a reasonable valuation. Let's break it down further.

ChartMill's Evaluation of Growth

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:NVO scores a 7 out of 10:

• NVO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 22.49%, which is quite impressive.
• NVO shows a strong growth in Revenue. In the last year, the Revenue has grown by 25.03%.
• NVO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 18.94% yearly.
• Based on estimates for the next years, NVO will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.44% on average per year.
• The Revenue is expected to grow by 13.01% 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.

What does the Valuation looks like for NYSE:NVO

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 NYSE:NVO, the assigned 7 reflects its valuation:

• Based on the Price/Earnings ratio, NVO is valued cheaply inside the industry as 82.26% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 80.65% of the companies listed in the same industry.
• When comparing the Price/Forward Earnings ratio of NVO to the average of the S&P500 Index (94.77), we can say NVO is valued rather cheaply.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 81.18% of the companies listed in the same industry.
• NVO's Price/Free Cash Flow ratio is rather cheap when compared to the industry. NVO is cheaper than 81.18% of the companies in the same industry.
• NVO has an outstanding profitability rating, which may justify a higher PE ratio.
• A more expensive valuation may be justified as NVO's earnings are expected to grow with 16.84% in the coming years.

How We Gauge Health for NYSE:NVO

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. NYSE:NVO has received a 7 out of 10:

• NVO has an Altman-Z score of 6.99. This indicates that NVO is financially healthy and has little risk of bankruptcy at the moment.
• NVO has a better Altman-Z score (6.99) than 83.33% of its industry peers.
• The Debt to FCF ratio of NVO is 1.48, which is an excellent value as it means it would take NVO, only 1.48 years of fcf income to pay off all of its debts.
• With an excellent Debt to FCF ratio value of 1.48, NVO belongs to the best of the industry, outperforming 95.16% of the companies in the same industry.
• 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 utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:NVO has earned a 9 out of 10:

• The Return On Assets of NVO (21.68%) is better than 98.92% of its industry peers.
• NVO has a better Return On Equity (70.38%) than 98.92% of its industry peers.
• The Return On Invested Capital of NVO (43.02%) is better than 98.39% 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 44.03%.
• The 3 year average ROIC (50.29%) for NVO is well above the current ROIC(43.02%). The reason for the recent decline needs to be investigated.
• NVO has a Profit Margin of 34.78%. This is amongst the best in the industry. NVO outperforms 97.31% of its industry peers.
• In the last couple of years the Profit Margin of NVO has grown nicely.
• NVO has a better Operating Margin (46.16%) than 98.39% of its industry peers.
• In the last couple of years the Operating Margin of NVO has grown nicely.
• With an excellent Gross Margin value of 84.67%, NVO belongs to the best of the industry, outperforming 90.86% of the companies in the same industry.

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

Disclaimer

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.