Don't overlook NYSE:NVS—it's a hidden gem with strong fundamentals and an attractive price tag.

Last update: Jan 10, 2025

Our stock screening tool has pinpointed NOVARTIS AG-SPONSORED ADR (NYSE:NVS) as an undervalued stock option. NYSE:NVS retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

How do we evaluate the Valuation for NYSE:NVS?

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:NVS scores a 8 out of 10:

Based on the Price/Earnings ratio, NVS is valued cheaply inside the industry as 89.67% of the companies are valued more expensively.
NVS's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.34.
NVS is valuated reasonably with a Price/Forward Earnings ratio of 11.87.
Based on the Price/Forward Earnings ratio, NVS is valued cheaply inside the industry as 84.78% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 23.61. NVS is valued slightly cheaper when compared to this.
Based on the Enterprise Value to EBITDA ratio, NVS is valued cheaper than 85.33% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaply inside the industry as 88.04% of the companies are valued more expensively.
The excellent profitability rating of NVS may justify a higher PE ratio.

Understanding NYSE:NVS's Profitability

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:

With an excellent Return On Assets value of 18.66%, NVS belongs to the best of the industry, outperforming 98.37% of the companies in the same industry.
The Return On Equity of NVS (44.37%) is better than 96.74% of its industry peers.
The Return On Invested Capital of NVS (20.91%) is better than 96.20% of its industry peers.
The last Return On Invested Capital (20.91%) for NVS is above the 3 year average (11.23%), which is a sign of increasing profitability.
The Profit Margin of NVS (35.25%) is better than 97.28% of its industry peers.
NVS's Profit Margin has improved in the last couple of years.
The Operating Margin of NVS (30.55%) is better than 94.02% of its industry peers.
In the last couple of years the Operating Margin of NVS has grown nicely.
With an excellent Gross Margin value of 74.99%, NVS belongs to the best of the industry, outperforming 81.52% of the companies in the same industry.

Understanding NYSE:NVS's Health Score

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:

An Altman-Z score of 3.80 indicates that NVS is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 3.80, NVS is doing good in the industry, outperforming 76.09% of the companies in the same industry.
NVS has a debt to FCF ratio of 2.07. This is a good value and a sign of high solvency as NVS would need 2.07 years to pay back of all of its debts.
The Debt to FCF ratio of NVS (2.07) is better than 94.57% of its industry peers.
NVS has a Debt/Equity ratio of 0.47. This is a healthy value indicating a solid balance between debt and equity.
Although NVS 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.
NVS 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.

Evaluating Growth: NYSE:NVS

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NYSE:NVS has earned a 4 for growth:

When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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

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

Disclaimer

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.