NOVARTIS AG-SPONSORED ADR (NVS) Stock Fundamental Analysis
NYSE:NVS - New York Stock Exchange, Inc. - US66987V1098 - ADR - Currency: USD
We assign a fundamental rating of 7 out of 10 to NVS. NVS was compared to 194 industry peers in the Pharmaceuticals industry. Both the health and profitability get an excellent rating, making NVS a very profitable company, without any liquidiy or solvency issues. NVS may be a bit undervalued, certainly considering the very reasonable score on growth This makes NVS very considerable for value investing!
1. Profitability
1.1 Basic Checks
In the past year NVS was profitable.
NVS had a positive operating cash flow in the past year.
Each year in the past 5 years NVS has been profitable.
Each year in the past 5 years NVS had a positive operating cash flow.
1.2 Ratios
NVS's Return On Assets of 12.25% is amongst the best of the industry. NVS outperforms 96.22% of its industry peers.
The Return On Equity of NVS (28.61%) is better than 96.22% of its industry peers.
NVS's Return On Invested Capital of 21.20% is amongst the best of the industry. NVS outperforms 96.22% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NVS is significantly below the industry average of 44.04%.
The last Return On Invested Capital (21.20%) for NVS is above the 3 year average (14.58%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.25% | ||
| ROE | 28.61% | ||
| ROIC | 21.2% |
ROA(3y)10.82%
ROA(5y)11.4%
ROE(3y)23.55%
ROE(5y)24.08%
ROIC(3y)14.58%
ROIC(5y)12.83%
1.3 Margins
NVS has a Profit Margin of 23.09%. This is amongst the best in the industry. NVS outperforms 95.14% of its industry peers.
In the last couple of years the Profit Margin of NVS has remained more or less at the same level.
With an excellent Operating Margin value of 31.57%, NVS belongs to the best of the industry, outperforming 94.05% of the companies in the same industry.
In the last couple of years the Operating Margin of NVS has grown nicely.
The Gross Margin of NVS (75.22%) is better than 81.62% of its industry peers.
In the last couple of years the Gross Margin of NVS has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 31.57% | ||
| PM (TTM) | 23.09% | ||
| GM | 75.22% |
OM growth 3Y8.17%
OM growth 5Y6.25%
PM growth 3Y-24.95%
PM growth 5Y-0.88%
GM growth 3Y0.5%
GM growth 5Y1.06%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so NVS is creating value.
Compared to 1 year ago, NVS has less shares outstanding
NVS has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, NVS has a worse debt to assets ratio.
2.2 Solvency
NVS has an Altman-Z score of 3.93. This indicates that NVS is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.93, NVS is in the better half of the industry, outperforming 77.30% of the companies in the same industry.
NVS has a debt to FCF ratio of 2.10. This is a good value and a sign of high solvency as NVS would need 2.10 years to pay back of all of its debts.
NVS's Debt to FCF ratio of 2.10 is amongst the best of the industry. NVS outperforms 93.51% of its industry peers.
NVS has a Debt/Equity ratio of 0.51. This is a neutral value indicating NVS is somewhat dependend on debt financing.
The Debt to Equity ratio of NVS (0.51) is worse than 64.32% of its industry peers.
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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.51 | ||
| Debt/FCF | 2.1 | ||
| Altman-Z | 3.93 |
ROIC/WACC4.52
WACC4.69%
2.3 Liquidity
NVS has a Current Ratio of 0.93. This is a bad value and indicates that NVS is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.93, NVS is not doing good in the industry: 88.11% of the companies in the same industry are doing better.
NVS has a Quick Ratio of 0.93. This is a bad value and indicates that NVS is not financially healthy enough and could expect problems in meeting its short term obligations.
NVS has a worse Quick ratio (0.72) than 89.19% of its industry peers.
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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.72 |
3. Growth
3.1 Past
NVS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 13.19%, which is quite good.
NVS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.14% yearly.
NVS shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -13.61%.
The Revenue has been growing slightly by 1.24% on average over the past years.
EPS 1Y (TTM)13.19%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%29.41%
Revenue 1Y (TTM)-13.61%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%15.14%
3.2 Future
Based on estimates for the next years, NVS will show a small growth in Earnings Per Share. The EPS will grow by 3.76% on average per year.
NVS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 1.85% yearly.
EPS Next Y4.9%
EPS Next 2Y5.69%
EPS Next 3Y5.17%
EPS Next 5Y3.76%
Revenue Next Year4.08%
Revenue Next 2Y3.08%
Revenue Next 3Y1.87%
Revenue Next 5Y1.85%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 13.77 indicates a correct valuation of NVS.
Compared to the rest of the industry, the Price/Earnings ratio of NVS indicates a rather cheap valuation: NVS is cheaper than 89.19% of the companies listed in the same industry.
NVS is valuated cheaply when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 13.13, the valuation of NVS can be described as correct.
Based on the Price/Forward Earnings ratio, NVS is valued cheaper than 84.86% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of NVS to the average of the S&P500 Index (22.68), we can say NVS is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.77 | ||
| Fwd PE | 13.13 |
4.2 Price Multiples
NVS's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. NVS is cheaper than 84.32% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaply inside the industry as 88.65% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 15.64 | ||
| EV/EBITDA | 11.13 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of NVS may justify a higher PE ratio.
PEG (NY)2.81
PEG (5Y)1.69
EPS Next 2Y5.69%
EPS Next 3Y5.17%
5. Dividend
5.1 Amount
NVS has a Yearly Dividend Yield of 3.58%. Purely for dividend investing, there may be better candidates out there.
NVS's Dividend Yield is rather good when compared to the industry average which is at 4.35. NVS pays more dividend than 94.05% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.29, NVS pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.58% |
5.2 History
The dividend of NVS has a limited annual growth rate of 5.49%.
NVS has paid a dividend for at least 10 years, which is a reliable track record.
NVS has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)5.49%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
63.85% of the earnings are spent on dividend by NVS. This is not a sustainable payout ratio.
NVS's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP63.85%
EPS Next 2Y5.69%
EPS Next 3Y5.17%
109.35
+2.04 (+1.9%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners39.02%
Inst Owner Change-0.35%
Ins Owners0.01%
Ins Owner ChangeN/A
Market Cap215.98B
Analysts70
Price Target117.2 (7.18%)
Short Float %0.24%
Short Ratio2.54
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.58% |
Yearly Dividend3.79
Dividend Growth(5Y)5.49%
DP63.85%
Div Incr Years4
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.92%
Min EPS beat(2)3.78%
Max EPS beat(2)6.06%
EPS beat(4)4
Avg EPS beat(4)4.62%
Min EPS beat(4)3.24%
Max EPS beat(4)6.06%
EPS beat(8)7
Avg EPS beat(8)3.75%
EPS beat(12)9
Avg EPS beat(12)3.14%
EPS beat(16)11
Avg EPS beat(16)2.37%
Revenue beat(2)1
Avg Revenue beat(2)-0.27%
Min Revenue beat(2)-1.32%
Max Revenue beat(2)0.78%
Revenue beat(4)2
Avg Revenue beat(4)-0.07%
Min Revenue beat(4)-1.32%
Max Revenue beat(4)1.02%
Revenue beat(8)4
Avg Revenue beat(8)-0.44%
Revenue beat(12)4
Avg Revenue beat(12)-0.74%
Revenue beat(16)6
Avg Revenue beat(16)-0.34%
PT rev (1m)-0.6%
PT rev (3m)-3.79%
EPS NQ rev (1m)-6.35%
EPS NQ rev (3m)-2.27%
EPS NY rev (1m)-1.36%
EPS NY rev (3m)-1.04%
Revenue NQ rev (1m)1.77%
Revenue NQ rev (3m)5.09%
Revenue NY rev (1m)-0.39%
Revenue NY rev (3m)-0.25%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.77 | ||
| Fwd PE | 13.13 | ||
| P/S | 4.18 | ||
| P/FCF | 15.64 | ||
| P/OCF | 12.26 | ||
| P/B | 5.18 | ||
| P/tB | N/A | ||
| EV/EBITDA | 11.13 |
EPS(TTM)7.94
EY7.26%
EPS(NY)8.33
Fwd EY7.62%
FCF(TTM)6.99
FCFY6.39%
OCF(TTM)8.92
OCFY8.16%
SpS26.19
BVpS21.13
TBVpS-5.71
PEG (NY)2.81
PEG (5Y)1.69
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.25% | ||
| ROE | 28.61% | ||
| ROCE | 23.36% | ||
| ROIC | 21.2% | ||
| ROICexc | 23.93% | ||
| ROICexgc | 166.24% | ||
| OM | 31.57% | ||
| PM (TTM) | 23.09% | ||
| GM | 75.22% | ||
| FCFM | 26.69% |
ROA(3y)10.82%
ROA(5y)11.4%
ROE(3y)23.55%
ROE(5y)24.08%
ROIC(3y)14.58%
ROIC(5y)12.83%
ROICexc(3y)17.82%
ROICexc(5y)15.74%
ROICexgc(3y)90.48%
ROICexgc(5y)78.58%
ROCE(3y)16.96%
ROCE(5y)14.93%
ROICexcg growth 3Y14.29%
ROICexcg growth 5Y25.26%
ROICexc growth 3Y20.9%
ROICexc growth 5Y13.17%
OM growth 3Y8.17%
OM growth 5Y6.25%
PM growth 3Y-24.95%
PM growth 5Y-0.88%
GM growth 3Y0.5%
GM growth 5Y1.06%
F-Score5
Asset Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.51 | ||
| Debt/FCF | 2.1 | ||
| Debt/EBITDA | 1.01 | ||
| Cap/Depr | 82.93% | ||
| Cap/Sales | 7.37% | ||
| Interest Coverage | 19.1 | ||
| Cash Conversion | 84.18% | ||
| Profit Quality | 115.61% | ||
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.72 | ||
| Altman-Z | 3.93 |
F-Score5
WACC4.69%
ROIC/WACC4.52
Cap/Depr(3y)51.13%
Cap/Depr(5y)48.4%
Cap/Sales(3y)6.48%
Cap/Sales(5y)6.27%
Profit Quality(3y)120.24%
Profit Quality(5y)109.63%
High Growth Momentum
Growth
EPS 1Y (TTM)13.19%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%29.41%
EPS Next Y4.9%
EPS Next 2Y5.69%
EPS Next 3Y5.17%
EPS Next 5Y3.76%
Revenue 1Y (TTM)-13.61%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%15.14%
Revenue Next Year4.08%
Revenue Next 2Y3.08%
Revenue Next 3Y1.87%
Revenue Next 5Y1.85%
EBIT growth 1Y3.08%
EBIT growth 3Y14.18%
EBIT growth 5Y7.57%
EBIT Next Year26.53%
EBIT Next 3Y10.71%
EBIT Next 5Y7.85%
FCF growth 1Y17.94%
FCF growth 3Y4.49%
FCF growth 5Y3.96%
OCF growth 1Y21.86%
OCF growth 3Y5.34%
OCF growth 5Y5.28%