NYSE:NVS: good value for what you're paying.

Last update: Sep 3, 2024

NOVARTIS AG-SPONSORED ADR (NYSE:NVS) was identified as a decent value stock by our stock screener. NYSE:NVS 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.

Assessing Valuation for NYSE:NVS

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. NYSE:NVS was assigned a score of 7 for valuation:

Based on the Price/Earnings ratio, NVS is valued cheaper than 89.23% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 30.73, NVS is valued a bit cheaper.
Based on the Price/Forward Earnings ratio, NVS is valued cheaper than 84.62% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.86. NVS is valued slightly cheaper when compared to this.
NVS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NVS is cheaper than 87.18% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaper than 84.62% of the companies in the same industry.
NVS has an outstanding profitability rating, which may justify a higher PE ratio.

Assessing Profitability for NYSE:NVS

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:NVS, the assigned 9 is a significant indicator of profitability:

NVS has a Return On Assets of 18.59%. This is amongst the best in the industry. NVS outperforms 97.44% of its industry peers.
NVS's Return On Equity of 44.20% is amongst the best of the industry. NVS outperforms 95.38% of its industry peers.
NVS has a better Return On Invested Capital (22.45%) than 96.92% of its industry peers.
The last Return On Invested Capital (22.45%) for NVS is above the 3 year average (11.23%), which is a sign of increasing profitability.
NVS has a Profit Margin of 29.84%. This is amongst the best in the industry. NVS outperforms 95.38% of its industry peers.
NVS's Profit Margin has improved in the last couple of years.
The Operating Margin of NVS (27.87%) is better than 92.82% of its industry peers.
NVS's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 74.29%, NVS belongs to the top of the industry, outperforming 81.54% of the companies in the same industry.

Analyzing Health Metrics

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:NVS has earned a 6 out of 10:

An Altman-Z score of 4.45 indicates that NVS is not in any danger for bankruptcy at the moment.
NVS has a better Altman-Z score (4.45) than 78.46% of its industry peers.
The Debt to FCF ratio of NVS is 2.63, which is a good value as it means it would take NVS, 2.63 years of fcf income to pay off all of its debts.
NVS has a better Debt to FCF ratio (2.63) than 93.33% of its industry peers.
A Debt/Equity ratio of 0.47 indicates that NVS is not too dependend on debt financing.
The current and quick ratio evaluation for NVS 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.

Evaluating Growth: NYSE:NVS

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. NYSE:NVS has achieved a 4 out of 10:

The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

More Decent Value stocks can be found in our Decent Value screener.

Our latest full fundamental report of NVS 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.