NOVARTIS AG-SPONSORED ADR (NVS) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:NVS - US66987V1098 - ADR
147.87 USD
-4.35 (-2.86%)
147.69 USD
-0.18 (-0.12%)
We assign a fundamental rating of 7 out of 10 to NVS. NVS was compared to 190 industry peers in the Pharmaceuticals industry. NVS scores excellent points on both the profitability and health parts. This is a solid base for a good stock. A decent growth rate in combination with a cheap valuation! Better keep an eye on NVS. Finally NVS also has an excellent dividend rating. With these ratings, NVS could be worth investigating further for value and dividend and quality 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.
- In the past 5 years NVS has always been profitable.
- Each year in the past 5 years NVS had a positive operating cash flow.
1.2 Ratios
- NVS has a better Return On Assets (13.42%) than 94.21% of its industry peers.
- With an excellent Return On Equity value of 32.47%, NVS belongs to the best of the industry, outperforming 94.21% of the companies in the same industry.
- The Return On Invested Capital of NVS (22.36%) is better than 97.37% of its industry peers.
- NVS had an Average Return On Invested Capital over the past 3 years of 14.58%. This is in line with the industry average of 12.83%.
- The last Return On Invested Capital (22.36%) for NVS is above the 3 year average (14.58%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.42% | ||
| ROE | 32.47% | ||
| ROIC | 22.36% |
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
- Looking at the Profit Margin, with a value of 25.69%, NVS belongs to the top of the industry, outperforming 92.11% of the companies in the same industry.
- In the last couple of years the Profit Margin of NVS has remained more or less at the same level.
- NVS's Operating Margin of 33.11% is amongst the best of the industry. NVS outperforms 94.74% of its industry peers.
- NVS's Operating Margin has improved in the last couple of years.
- Looking at the Gross Margin, with a value of 76.10%, NVS belongs to the top of the industry, outperforming 82.11% of the companies in the same industry.
- NVS's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 33.11% | ||
| PM (TTM) | 25.69% | ||
| GM | 76.1% |
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
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), NVS is creating value.
- The number of shares outstanding for NVS has been reduced compared to 1 year ago.
- 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 4.32. 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 4.32, NVS is in the better half of the industry, outperforming 71.58% of the companies in the same industry.
- The Debt to FCF ratio of NVS is 1.87, which is an excellent value as it means it would take NVS, only 1.87 years of fcf income to pay off all of its debts.
- NVS has a better Debt to FCF ratio (1.87) than 94.21% of its industry peers.
- NVS has a Debt/Equity ratio of 0.55. This is a neutral value indicating NVS is somewhat dependend on debt financing.
- NVS has a Debt to Equity ratio of 0.55. This is in the lower half of the industry: NVS underperforms 65.26% 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 | 0.55 | ||
| Debt/FCF | 1.87 | ||
| Altman-Z | 4.32 |
ROIC/WACC4.71
WACC4.75%
2.3 Liquidity
- A Current Ratio of 0.88 indicates that NVS may have some problems paying its short term obligations.
- NVS's Current ratio of 0.88 is on the low side compared to the rest of the industry. NVS is outperformed by 86.84% of its industry peers.
- NVS has a Quick Ratio of 0.88. This is a bad value and indicates that NVS is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Quick ratio of NVS (0.68) is worse than 86.84% 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 | 0.88 | ||
| Quick Ratio | 0.68 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 21.33% over the past year.
- Measured over the past years, NVS shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.14% on average per year.
- Looking at the last year, NVS shows a quite strong growth in Revenue. The Revenue has grown by 12.18% in the last year.
- Measured over the past years, NVS shows a small growth in Revenue. The Revenue has been growing by 1.24% on average per year.
EPS 1Y (TTM)21.33%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%9.22%
Revenue 1Y (TTM)12.18%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%8.47%
3.2 Future
- The Earnings Per Share is expected to grow by 8.79% on average over the next years. This is quite good.
- The Revenue is expected to grow by 5.27% on average over the next years.
EPS Next Y16.8%
EPS Next 2Y9.28%
EPS Next 3Y8.59%
EPS Next 5Y8.79%
Revenue Next Year9.91%
Revenue Next 2Y6.24%
Revenue Next 3Y5.54%
Revenue Next 5Y5.27%
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 stable.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 16.38, the valuation of NVS can be described as correct.
- Based on the Price/Earnings ratio, NVS is valued cheaper than 84.74% of the companies in the same industry.
- When comparing the Price/Earnings ratio of NVS to the average of the S&P500 Index (28.60), we can say NVS is valued slightly cheaper.
- A Price/Forward Earnings ratio of 15.68 indicates a correct valuation of NVS.
- Based on the Price/Forward Earnings ratio, NVS is valued cheaply inside the industry as 82.11% of the companies are valued more expensively.
- The average S&P500 Price/Forward Earnings ratio is at 25.83. NVS is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.38 | ||
| Fwd PE | 15.68 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NVS indicates a rather cheap valuation: NVS is cheaper than 83.68% of the companies listed in the same industry.
- Based on the Price/Free Cash Flow ratio, NVS is valued cheaply inside the industry as 86.32% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.63 | ||
| EV/EBITDA | 12.77 |
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 NVS may justify a higher PE ratio.
PEG (NY)0.97
PEG (5Y)2.01
EPS Next 2Y9.28%
EPS Next 3Y8.59%
5. Dividend
5.1 Amount
- NVS has a Yearly Dividend Yield of 3.04%.
- NVS's Dividend Yield is rather good when compared to the industry average which is at 0.46. NVS pays more dividend than 94.74% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, NVS pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.04% |
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.
- As NVS did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)5.49%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
- 54.32% of the earnings are spent on dividend by NVS. This is a bit on the high side, but may be sustainable.
- NVS's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP54.32%
EPS Next 2Y9.28%
EPS Next 3Y8.59%
NOVARTIS AG-SPONSORED ADR / NVS FAQ
What is the ChartMill fundamental rating of NOVARTIS AG-SPONSORED ADR (NVS) stock?
ChartMill assigns a fundamental rating of 7 / 10 to NVS.
What is the valuation status for NVS stock?
ChartMill assigns a valuation rating of 7 / 10 to NOVARTIS AG-SPONSORED ADR (NVS). This can be considered as Undervalued.
How profitable is NOVARTIS AG-SPONSORED ADR (NVS) stock?
NOVARTIS AG-SPONSORED ADR (NVS) has a profitability rating of 9 / 10.
How financially healthy is NOVARTIS AG-SPONSORED ADR?
The financial health rating of NOVARTIS AG-SPONSORED ADR (NVS) is 7 / 10.
Is the dividend of NOVARTIS AG-SPONSORED ADR sustainable?
The dividend rating of NOVARTIS AG-SPONSORED ADR (NVS) is 7 / 10 and the dividend payout ratio is 54.32%.