NOVO-NORDISK A/S-SPONS ADR (NVO) Stock Fundamental Analysis
NYSE:NVO - New York Stock Exchange, Inc. - US6701002056 - ADR - Currency: USD
We assign a fundamental rating of 8 out of 10 to NVO. NVO was compared to 197 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. NVO has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination! These ratings could make NVO a good candidate for value and growth and quality investing.
1. Profitability
1.1 Basic Checks
NVO had positive earnings in the past year.
In the past year NVO had a positive cash flow from operations.
Each year in the past 5 years NVO has been profitable.
Each year in the past 5 years NVO had a positive operating cash flow.
1.2 Ratios
NVO has a Return On Assets of 21.68%. This is amongst the best in the industry. NVO outperforms 98.48% of its industry peers.
With an excellent Return On Equity value of 70.38%, NVO belongs to the best of the industry, outperforming 98.48% of the companies in the same industry.
NVO has a better Return On Invested Capital (43.02%) than 97.97% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NVO is significantly above the industry average of 40.40%.
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 Rank | Sector 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%
1.3 Margins
With an excellent Profit Margin value of 34.78%, NVO belongs to the best of the industry, outperforming 97.46% of the companies in the same industry.
NVO's Profit Margin has improved in the last couple of years.
NVO has a Operating Margin of 46.16%. This is amongst the best in the industry. NVO outperforms 97.97% of its industry peers.
In the last couple of years the Operating Margin of NVO has grown nicely.
With an excellent Gross Margin value of 84.67%, NVO belongs to the best of the industry, outperforming 89.34% of the companies in the same industry.
NVO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector 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%
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
NVO has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.01 indicates that NVO is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.01, NVO belongs to the top of the industry, outperforming 83.25% of the companies in the same industry.
NVO has a debt to FCF ratio of 1.48. This is a very positive value and a sign of high solvency as it would only need 1.48 years to pay back of all of its debts.
NVO's Debt to FCF ratio of 1.48 is amongst the best of the industry. NVO outperforms 94.42% of its industry peers.
A Debt/Equity ratio of 0.62 indicates that NVO is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.62, NVO is doing worse than 65.48% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for NVO, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1.48 | ||
| Altman-Z | 5.01 |
ROIC/WACC6.54
WACC6.58%
2.3 Liquidity
A Current Ratio of 0.74 indicates that NVO may have some problems paying 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 90.86% of its industry peers.
NVO has a Quick 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 Quick ratio of 0.55 is on the low side compared to the rest of the industry. NVO is outperformed by 90.36% of its industry peers.
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 Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.55 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 21.57% over the past year.
NVO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.68% yearly.
The Revenue has grown by 25.03% in the past year. This is a very strong growth!
Measured over the past years, NVO shows a quite strong growth in Revenue. The Revenue has been growing by 18.94% on average per year.
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
The Earnings Per Share is expected to grow by 13.97% on average over the next years. This is quite good.
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 Y22.26%
EPS Next 2Y23.01%
EPS Next 3Y19.38%
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.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
NVO is valuated correctly with a Price/Earnings ratio of 16.83.
Compared to the rest of the industry, the Price/Earnings ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 84.77% of the companies listed in the same industry.
NVO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.29.
The Price/Forward Earnings ratio is 13.76, which indicates a correct valuation of NVO.
NVO's Price/Forward Earnings ratio is rather cheap when compared to the industry. NVO is cheaper than 84.77% of the companies in the same industry.
NVO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.08, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.83 | ||
| Fwd PE | 13.76 |
4.2 Price Multiples
82.74% of the companies in the same industry are more expensive than NVO, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NVO indicates a rather cheap valuation: NVO is cheaper than 81.73% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.33 | ||
| EV/EBITDA | 11.5 |
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.
The excellent profitability rating of NVO may justify a higher PE ratio.
NVO's earnings are expected to grow with 19.38% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.76
PEG (5Y)2.52
EPS Next 2Y23.01%
EPS Next 3Y19.38%
5. Dividend
5.1 Amount
NVO has a Yearly Dividend Yield of 2.78%. Purely for dividend investing, there may be better candidates out there.
The stock price of NVO dropped by -26.19% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
NVO's Dividend Yield is rather good when compared to the industry average which is at 4.29. NVO pays more dividend than 92.89% of the companies in the same industry.
NVO's Dividend Yield is comparable with the S&P500 average which is at 2.57.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.78% |
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
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.
The dividend of NVO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP43.71%
EPS Next 2Y23.01%
EPS Next 3Y19.38%
58.08
-4.8 (-7.63%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners37.62%
Inst Owner Change0.01%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap257.82B
Analysts76.88
Price Target119.67 (106.04%)
Short Float %0.31%
Short Ratio1.55
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.78% |
Yearly Dividend1.51
Dividend Growth(5Y)16.56%
DP43.71%
Div Incr Years7
Div Non Decr Years7
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.05%
Min EPS beat(2)0.64%
Max EPS beat(2)7.46%
EPS beat(4)3
Avg EPS beat(4)2.73%
Min EPS beat(4)-4.65%
Max EPS beat(4)7.46%
EPS beat(8)6
Avg EPS beat(8)2.56%
EPS beat(12)9
Avg EPS beat(12)2.47%
EPS beat(16)13
Avg EPS beat(16)3.1%
Revenue beat(2)1
Avg Revenue beat(2)2.19%
Min Revenue beat(2)-2.57%
Max Revenue beat(2)6.95%
Revenue beat(4)2
Avg Revenue beat(4)1.23%
Min Revenue beat(4)-2.57%
Max Revenue beat(4)6.95%
Revenue beat(8)5
Avg Revenue beat(8)1.24%
Revenue beat(12)8
Avg Revenue beat(12)1.42%
Revenue beat(16)12
Avg Revenue beat(16)1.54%
PT rev (1m)0.38%
PT rev (3m)-13.27%
EPS NQ rev (1m)-4.02%
EPS NQ rev (3m)-3.28%
EPS NY rev (1m)-0.43%
EPS NY rev (3m)-4.45%
Revenue NQ rev (1m)-1.4%
Revenue NQ rev (3m)0.64%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.97%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.83 | ||
| Fwd PE | 13.76 | ||
| P/S | 5.84 | ||
| P/FCF | 24.33 | ||
| P/OCF | 14.01 | ||
| P/B | 11.81 | ||
| P/tB | 52.31 | ||
| EV/EBITDA | 11.5 |
EPS(TTM)3.45
EY5.94%
EPS(NY)4.22
Fwd EY7.27%
FCF(TTM)2.39
FCFY4.11%
OCF(TTM)4.15
OCFY7.14%
SpS9.95
BVpS4.92
TBVpS1.11
PEG (NY)0.76
PEG (5Y)2.52
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 21.68% | ||
| ROE | 70.38% | ||
| ROCE | 53.99% | ||
| ROIC | 43.02% | ||
| ROICexc | 48.11% | ||
| ROICexgc | 96.32% | ||
| OM | 46.16% | ||
| PM (TTM) | 34.78% | ||
| GM | 84.67% | ||
| FCFM | 23.99% |
ROA(3y)23.77%
ROA(5y)24.99%
ROE(3y)71.81%
ROE(5y)69.89%
ROIC(3y)50.29%
ROIC(5y)49.64%
ROICexc(3y)60.7%
ROICexc(5y)59.32%
ROICexgc(3y)124.92%
ROICexgc(5y)112.44%
ROCE(3y)63.71%
ROCE(5y)65.35%
ROICexcg growth 3Y-1.28%
ROICexcg growth 5Y0.46%
ROICexc growth 3Y-2.16%
ROICexc growth 5Y-9.95%
OM growth 3Y4.3%
OM growth 5Y1.69%
PM growth 3Y0.84%
PM growth 5Y1.73%
GM growth 3Y0.72%
GM growth 5Y0.24%
F-Score5
Asset Turnover0.62
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 1.48 | ||
| Debt/EBITDA | 0.59 | ||
| Cap/Depr | 268.54% | ||
| Cap/Sales | 17.67% | ||
| Interest Coverage | 219.02 | ||
| Cash Conversion | 78.99% | ||
| Profit Quality | 68.98% | ||
| Current Ratio | 0.74 | ||
| Quick Ratio | 0.55 | ||
| Altman-Z | 5.01 |
F-Score5
WACC6.58%
ROIC/WACC6.54
Cap/Depr(3y)294.05%
Cap/Depr(5y)277.71%
Cap/Sales(3y)14.25%
Cap/Sales(5y)13.08%
Profit Quality(3y)89.38%
Profit Quality(5y)87.75%
High Growth Momentum
Growth
EPS 1Y (TTM)21.57%
EPS 3Y2.95%
EPS 5Y6.68%
EPS Q2Q%29.12%
EPS Next Y22.26%
EPS Next 2Y23.01%
EPS Next 3Y19.38%
EPS Next 5Y13.97%
Revenue 1Y (TTM)25.03%
Revenue growth 3Y27.29%
Revenue growth 5Y18.94%
Sales Q2Q%30.09%
Revenue Next Year23.4%
Revenue Next 2Y20.17%
Revenue Next 3Y16.86%
Revenue Next 5Y12.68%
EBIT growth 1Y30.68%
EBIT growth 3Y32.76%
EBIT growth 5Y20.94%
EBIT Next Year40.14%
EBIT Next 3Y22.7%
EBIT Next 5Y15.67%
FCF growth 1Y-0.5%
FCF growth 3Y13.52%
FCF growth 5Y14.4%
OCF growth 1Y11.07%
OCF growth 3Y30.05%
OCF growth 5Y20.93%