For those who appreciate value investing, NYSE:NVS is a compelling option with its solid fundamentals.

Last update: Dec 19, 2024

Our stock screener has singled out NOVARTIS AG-SPONSORED ADR (NYSE:NVS) as a stellar value proposition. NYSE:NVS not only scores well in profitability, solvency, and liquidity but also maintains a very reasonable price point. We'll explore this further.

Understanding NYSE:NVS's Valuation Score

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:NVS, the assigned 8 reflects its valuation:

NVS's Price/Earnings ratio is rather cheap when compared to the industry. NVS is cheaper than 89.01% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.72. NVS is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 11.61 indicates a reasonable valuation of NVS.
84.29% of the companies in the same industry are more expensive than NVS, based on the Price/Forward Earnings ratio.
NVS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.64, which is the current average of the S&P500 Index.
85.34% of the companies in the same industry are more expensive than NVS, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaper than 87.43% 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 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:NVS scores a 9 out of 10:

NVS has a better Return On Assets (18.66%) than 98.43% of its industry peers.
NVS's Return On Equity of 44.37% is amongst the best of the industry. NVS outperforms 96.34% of its industry peers.
The Return On Invested Capital of NVS (20.91%) is better than 96.34% of its industry peers.
The 3 year average ROIC (11.23%) for NVS is below the current ROIC(20.91%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 35.25%, NVS belongs to the best of the industry, outperforming 97.38% of the companies in the same industry.
In the last couple of years the Profit Margin of NVS has grown nicely.
With an excellent Operating Margin value of 30.55%, NVS belongs to the best of the industry, outperforming 94.24% of the companies in the same industry.
In the last couple of years the Operating Margin of NVS has grown nicely.
NVS has a better Gross Margin (74.99%) than 82.20% of its industry peers.

Evaluating Health: NYSE:NVS

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 7 out of 10:

NVS has an Altman-Z score of 3.76. This indicates that NVS is financially healthy and has little risk of bankruptcy at the moment.
NVS has a Altman-Z score of 3.76. This is in the better half of the industry: NVS outperforms 78.01% of its industry peers.
The Debt to FCF ratio of NVS is 2.07, which is a good value as it means it would take NVS, 2.07 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 2.07, NVS belongs to the best of the industry, outperforming 94.24% of the companies in the same industry.
A Debt/Equity ratio of 0.47 indicates that NVS is not too dependend on debt financing.
Even though the debt/equity ratio score it not favorable for NVS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
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.

Understanding NYSE:NVS's Growth Score

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:NVS has received 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.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of NVS 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.