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NOVO-NORDISK A/S-SPONS ADR

New York Stock Exchange, Inc. / Health Care / Pharmaceuticals

Fundamental Rating

8

We assign a fundamental rating of 8 out of 10 to NVO. NVO was compared to 198 industry peers in the Pharmaceuticals industry. NVO has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. An interesting combination arises when we look at growth and value: NVO is growing strongly while it also seems undervalued. With these ratings, NVO could be worth investigating further for value and growth and quality investing!.


Dividend Valuation Growth Profitability Health

9

1. Profitability

1.1 Basic Checks

In the past year NVO was profitable.
In the past year NVO had a positive cash flow from operations.
NVO had positive earnings in each of the past 5 years.
NVO had a positive operating cash flow in each of the past 5 years.
NVO Yearly Net Income VS EBIT VS OCF VS FCFNVO Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B 100B

1.2 Ratios

Looking at the Return On Assets, with a value of 21.68%, NVO belongs to the top of the industry, outperforming 98.48% of the companies in the same industry.
NVO has a better Return On Equity (70.38%) than 98.48% of its industry peers.
NVO's Return On Invested Capital of 43.02% is amongst the best of the industry. NVO outperforms 97.98% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NVO is significantly above the industry average of 41.77%.
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.
Industry RankSector Rank
ROA 21.68%
ROE 70.38%
ROIC 43.02%
ROA(3y)23.77%
ROA(5y)24.99%
ROE(3y)71.81%
ROE(5y)69.89%
ROIC(3y)50.29%
ROIC(5y)49.64%
NVO Yearly ROA, ROE, ROICNVO Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60 80

1.3 Margins

With an excellent Profit Margin value of 34.78%, NVO belongs to the best of the industry, outperforming 97.47% of the companies in the same industry.
NVO's Profit Margin has improved in the last couple of years.
NVO's Operating Margin of 46.16% is amongst the best of the industry. NVO outperforms 97.98% of its industry peers.
In the last couple of years the Operating Margin of NVO has grown nicely.
NVO has a Gross Margin of 84.67%. This is amongst the best in the industry. NVO outperforms 88.89% of its industry peers.
In the last couple of years the Gross Margin of NVO has remained more or less at the same level.
Industry RankSector Rank
OM 46.16%
PM (TTM) 34.78%
GM 84.67%
OM growth 3Y4.3%
OM growth 5Y1.69%
PM growth 3Y0.84%
PM growth 5Y1.73%
GM growth 3Y0.72%
GM growth 5Y0.24%
NVO Yearly Profit, Operating, Gross MarginsNVO Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60 80

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7

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), NVO is creating value.
NVO has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, NVO has more shares outstanding
Compared to 1 year ago, NVO has a worse debt to assets ratio.
NVO Yearly Shares OutstandingNVO Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B
NVO Yearly Total Debt VS Total AssetsNVO Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100B 200B 300B 400B

2.2 Solvency

An Altman-Z score of 5.03 indicates that NVO is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 5.03, NVO belongs to the best of the industry, outperforming 84.34% of the companies in the same industry.
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.
NVO's Debt to FCF ratio of 1.48 is amongst the best of the industry. NVO outperforms 94.44% of its industry peers.
A Debt/Equity ratio of 0.62 indicates that NVO is somewhat dependend on debt financing.
The Debt to Equity ratio of NVO (0.62) is worse than 63.64% of its industry peers.
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.
Industry RankSector Rank
Debt/Equity 0.62
Debt/FCF 1.48
Altman-Z 5.03
ROIC/WACC6.27
WACC6.86%
NVO Yearly LT Debt VS Equity VS FCFNVO Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B

2.3 Liquidity

NVO has a Current Ratio of 0.74. This is a bad value and indicates that NVO is not financially healthy enough and could expect problems in meeting its short term obligations.
NVO's Current ratio of 0.74 is on the low side compared to the rest of the industry. NVO is outperformed by 88.89% of its industry peers.
A Quick Ratio of 0.55 indicates that NVO may have some problems paying its short term obligations.
With a Quick ratio value of 0.55, NVO is not doing good in the industry: 89.39% of the companies in the same industry are doing better.
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.
Industry RankSector Rank
Current Ratio 0.74
Quick Ratio 0.55
NVO Yearly Current Assets VS Current LiabilitesNVO Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B 150B 200B

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7

3. Growth

3.1 Past

NVO shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 21.57%, which is quite impressive.
Measured over the past 5 years, NVO shows a small growth in Earnings Per Share. The EPS has been growing by 6.68% on average per year.
NVO shows a strong growth in Revenue. In the last year, the Revenue has grown by 25.03%.
The Revenue has been growing by 18.94% on average over the past years. This is quite good.
EPS 1Y (TTM)21.57%
EPS 3Y2.95%
EPS 5Y6.68%
EPS Q2Q%29.12%
Revenue 1Y (TTM)25.03%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%30.09%

3.2 Future

Based on estimates for the next years, NVO will show a quite strong growth in Earnings Per Share. The EPS will grow by 13.97% on average per year.
NVO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.68% yearly.
EPS Next Y19.72%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
EPS Next 5Y13.97%
Revenue Next Year23.4%
Revenue Next 2Y20.17%
Revenue Next 3Y16.86%
Revenue Next 5Y12.68%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
NVO Yearly Revenue VS EstimatesNVO Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 100B 200B 300B 400B 500B
NVO Yearly EPS VS EstimatesNVO Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 10 20 30 40 50

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7

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 17.37 indicates a rather expensive valuation of NVO.
NVO's Price/Earnings ratio is rather cheap when compared to the industry. NVO is cheaper than 84.85% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.33, NVO is valued a bit cheaper.
NVO is valuated correctly with a Price/Forward Earnings ratio of 14.49.
84.34% of the companies in the same industry are more expensive than NVO, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 21.37. NVO is valued slightly cheaper when compared to this.
Industry RankSector Rank
PE 17.37
Fwd PE 14.49
NVO Price Earnings VS Forward Price EarningsNVO Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

4.2 Price Multiples

NVO's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NVO is cheaper than 82.83% of the companies 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 82.32% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 25.1
EV/EBITDA 11.54
NVO Per share dataNVO EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6 8

4.3 Compensation for Growth

NVO's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of NVO may justify a higher PE ratio.
A more expensive valuation may be justified as NVO's earnings are expected to grow with 18.20% in the coming years.
PEG (NY)0.88
PEG (5Y)2.6
EPS Next 2Y21.13%
EPS Next 3Y18.2%

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6

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 2.71%, NVO has a reasonable but not impressive dividend return.
In the last 3 months the price of NVO has falen by -31.90%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
NVO's Dividend Yield is rather good when compared to the industry average which is at 4.72. NVO pays more dividend than 92.42% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.51, NVO has a dividend comparable with the average S&P500 company.
Industry RankSector Rank
Dividend Yield 2.71%

5.2 History

The dividend of NVO is nicely growing with an annual growth rate of 16.56%!
NVO has been paying a dividend for at least 10 years, so it has a reliable track record.
As NVO did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)16.56%
Div Incr Years7
Div Non Decr Years7
NVO Yearly Dividends per shareNVO Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.5 1 1.5 2

5.3 Sustainability

43.71% of the earnings are spent on dividend by NVO. This is a bit on the high side, but may be sustainable.
NVO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP43.71%
EPS Next 2Y21.13%
EPS Next 3Y18.2%
NVO Yearly Income VS Free CF VS DividendNVO Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B 100B
NVO Dividend Payout.NVO Dividend Payout, showing the Payout Ratio.NVO Dividend Payout.PayoutRetained Earnings

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