Decent Value Stocks. Analyze the stocks with a good fundamental valuation, while still showing decent profitability, health and growth.


ALKERMES PLC

Nasdaq / Health Care / Biotechnology

Fundamental Rating

6

We assign a fundamental rating of 6 out of 10 to ALKS. ALKS was compared to 565 industry peers in the Biotechnology industry. ALKS is in great health and has no worries on liquidiy or solvency at all, but the profibility rating is only average. ALKS scores decently on growth, while it is valued quite cheap. This could make an interesting combination. With these ratings, ALKS could be worth investigating further for value investing!.



6

1. Profitability

1.1 Basic Checks

In the past year ALKS was profitable.
In the past year ALKS had a positive cash flow from operations.
ALKS had negative earnings in 4 of the past 5 years.
ALKS had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

ALKS has a better Return On Assets (15.47%) than 97.68% of its industry peers.
Looking at the Return On Equity, with a value of 25.80%, ALKS belongs to the top of the industry, outperforming 97.86% of the companies in the same industry.
The Return On Invested Capital of ALKS (20.27%) is better than 97.86% of its industry peers.
Industry RankSector Rank
ROA 15.47%
ROE 25.8%
ROIC 20.27%
ROA(3y)2.07%
ROA(5y)-2.07%
ROE(3y)3.36%
ROE(5y)-3.68%
ROIC(3y)N/A
ROIC(5y)N/A

1.3 Margins

With an excellent Profit Margin value of 22.15%, ALKS belongs to the best of the industry, outperforming 97.15% of the companies in the same industry.
With an excellent Operating Margin value of 29.00%, ALKS belongs to the best of the industry, outperforming 97.86% of the companies in the same industry.
The Gross Margin of ALKS (83.17%) is better than 87.52% of its industry peers.
In the last couple of years the Gross Margin of ALKS has remained more or less at the same level.
Industry RankSector Rank
OM 29%
PM (TTM) 22.15%
GM 83.17%
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y0.78%
GM growth 5Y0.22%

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7

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ALKS is creating value.
The number of shares outstanding for ALKS has been increased compared to 1 year ago.
The number of shares outstanding for ALKS has been increased compared to 5 years ago.
ALKS has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 4.37 indicates that ALKS is not in any danger for bankruptcy at the moment.
The Altman-Z score of ALKS (4.37) is better than 78.97% of its industry peers.
The Debt to FCF ratio of ALKS is 0.92, which is an excellent value as it means it would take ALKS, only 0.92 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 0.92, ALKS belongs to the best of the industry, outperforming 96.08% of the companies in the same industry.
A Debt/Equity ratio of 0.22 indicates that ALKS is not too dependend on debt financing.
ALKS has a Debt to Equity ratio of 0.22. This is in the lower half of the industry: ALKS underperforms 68.98% of its industry peers.
Even though the debt/equity ratio score it not favorable for ALKS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
Industry RankSector Rank
Debt/Equity 0.22
Debt/FCF 0.92
Altman-Z 4.37
ROIC/WACC2.83
WACC7.17%

2.3 Liquidity

A Current Ratio of 3.45 indicates that ALKS has no problem at all paying its short term obligations.
ALKS has a Current ratio (3.45) which is in line with its industry peers.
A Quick Ratio of 3.03 indicates that ALKS has no problem at all paying its short term obligations.
ALKS's Quick ratio of 3.03 is on the low side compared to the rest of the industry. ALKS is outperformed by 62.03% of its industry peers.
Industry RankSector Rank
Current Ratio 3.45
Quick Ratio 3.03

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4

3. Growth

3.1 Past

ALKS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 54.48%, which is quite impressive.
The Earnings Per Share has been growing by 18.41% on average over the past years. This is quite good.
ALKS shows a decrease in Revenue. In the last year, the revenue decreased by -5.37%.
ALKS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.74% yearly.
EPS 1Y (TTM)54.48%
EPS 3Y48.92%
EPS 5Y18.41%
EPS Q2Q%12.5%
Revenue 1Y (TTM)-5.37%
Revenue growth 3Y16.99%
Revenue growth 5Y8.74%
Sales Q2Q%-0.73%

3.2 Future

The Earnings Per Share is expected to grow by 10.51% on average over the next years. This is quite good.
The Revenue is expected to decrease by -2.19% on average over the next years.
EPS Next Y92.07%
EPS Next 2Y20.21%
EPS Next 3Y18.61%
EPS Next 5Y10.51%
Revenue Next Year-8.5%
Revenue Next 2Y-7.15%
Revenue Next 3Y-2.86%
Revenue Next 5Y-2.19%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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8

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 13.90, the valuation of ALKS can be described as correct.
ALKS's Price/Earnings ratio is rather cheap when compared to the industry. ALKS is cheaper than 97.50% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 29.20, ALKS is valued rather cheaply.
With a Price/Forward Earnings ratio of 14.02, ALKS is valued correctly.
Based on the Price/Forward Earnings ratio, ALKS is valued cheaper than 96.79% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ALKS to the average of the S&P500 Index (24.00), we can say ALKS is valued slightly cheaper.
Industry RankSector Rank
PE 13.9
Fwd PE 14.02

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALKS indicates a rather cheap valuation: ALKS is cheaper than 98.75% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ALKS is valued cheaper than 97.33% of the companies in the same industry.
Industry RankSector Rank
P/FCF 14.77
EV/EBITDA 7.03

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ALKS has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ALKS's earnings are expected to grow with 18.61% in the coming years.
PEG (NY)0.15
PEG (5Y)0.76
EPS Next 2Y20.21%
EPS Next 3Y18.61%

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0

5. Dividend

5.1 Amount

ALKS does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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