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 193 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. NVS is valued quite cheap, while showing a decent growth score. This is a good combination! These ratings would make NVS suitable for value and quality investing!
1. Profitability
1.1 Basic Checks
NVS had positive earnings in the past year.
NVS had a positive operating cash flow in the past year.
In the past 5 years NVS has always been profitable.
NVS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
NVS's Return On Assets of 12.87% is amongst the best of the industry. NVS outperforms 95.34% of its industry peers.
NVS has a better Return On Equity (33.51%) than 96.37% of its industry peers.
The Return On Invested Capital of NVS (23.17%) is better than 96.89% 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 14.87%.
The last Return On Invested Capital (23.17%) for NVS is above the 3 year average (14.58%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.87% | ||
| ROE | 33.51% | ||
| ROIC | 23.17% |
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 better Profit Margin (24.15%) than 95.34% of its industry peers.
NVS's Profit Margin has been stable in the last couple of years.
NVS's Operating Margin of 32.76% is amongst the best of the industry. NVS outperforms 95.34% 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 75.69%, NVS belongs to the top of the industry, outperforming 84.46% 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 | 32.76% | ||
| PM (TTM) | 24.15% | ||
| GM | 75.69% |
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.
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.
NVS has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.89 indicates that NVS is not in any danger for bankruptcy at the moment.
The Altman-Z score of NVS (3.89) is better than 76.68% of its industry peers.
The Debt to FCF ratio of NVS is 2.10, which is a good value as it means it would take NVS, 2.10 years of fcf income to pay off all of its debts.
NVS has a better Debt to FCF ratio (2.10) than 93.78% of its industry peers.
NVS has a Debt/Equity ratio of 0.61. This is a neutral value indicating NVS is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.61, NVS is not doing good in the industry: 64.25% of the companies in the same industry are doing better.
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 | 0.61 | ||
| Debt/FCF | 2.1 | ||
| Altman-Z | 3.89 |
ROIC/WACC4.97
WACC4.66%
2.3 Liquidity
A Current Ratio of 0.79 indicates that NVS may have some problems paying its short term obligations.
NVS has a worse Current ratio (0.79) than 88.60% of its industry peers.
NVS has a Quick Ratio of 0.79. 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's Quick ratio of 0.61 is on the low side compared to the rest of the industry. NVS is outperformed by 88.08% 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 | 0.79 | ||
| Quick Ratio | 0.61 |
3. Growth
3.1 Past
NVS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.60%, which is quite good.
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.
The Revenue has grown by 11.57% in the past year. This is quite good.
The Revenue has been growing slightly by 1.24% on average over the past years.
EPS 1Y (TTM)18.6%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%26.67%
Revenue 1Y (TTM)11.57%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%11.87%
3.2 Future
The Earnings Per Share is expected to grow by 6.52% on average over the next years.
The Revenue is expected to grow by 3.39% on average over the next years.
EPS Next Y11.31%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
EPS Next 5Y6.52%
Revenue Next Year7.74%
Revenue Next 2Y4.8%
Revenue Next 3Y4.01%
Revenue Next 5Y3.39%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
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
A Price/Earnings ratio of 14.57 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 87.56% of the companies listed in the same industry.
NVS is valuated rather cheaply when we compare the Price/Earnings ratio to 27.52, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 13.33 indicates a correct valuation of NVS.
Based on the Price/Forward Earnings ratio, NVS is valued cheaper than 80.83% of the companies in the same industry.
NVS is valuated cheaply when we compare the Price/Forward Earnings ratio to 35.58, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.57 | ||
| Fwd PE | 13.33 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NVS is valued cheaper than 86.53% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaply inside the industry as 86.01% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.1 | ||
| EV/EBITDA | 11.26 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
NVS has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.29
PEG (5Y)1.79
EPS Next 2Y7.7%
EPS Next 3Y7.64%
5. Dividend
5.1 Amount
NVS has a Yearly Dividend Yield of 3.53%. 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 4.00. NVS pays more dividend than 94.30% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.35, NVS pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.53% |
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 past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)5.49%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
60.27% of the earnings are spent on dividend by NVS. This is not a sustainable payout ratio.
NVS's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP60.27%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
121.04
+0.02 (+0.02%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners34.27%
Inst Owner Change-0.02%
Ins Owners0.01%
Ins Owner ChangeN/A
Market Cap239.06B
Analysts68.75
Price Target127.66 (5.47%)
Short Float %0.23%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.53% |
Yearly Dividend3.79
Dividend Growth(5Y)5.49%
DP60.27%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.32%
Min EPS beat(2)6.06%
Max EPS beat(2)6.59%
EPS beat(4)4
Avg EPS beat(4)4.92%
Min EPS beat(4)3.24%
Max EPS beat(4)6.59%
EPS beat(8)7
Avg EPS beat(8)3.4%
EPS beat(12)10
Avg EPS beat(12)3.74%
EPS beat(16)12
Avg EPS beat(16)3.05%
Revenue beat(2)1
Avg Revenue beat(2)-0.17%
Min Revenue beat(2)-1.13%
Max Revenue beat(2)0.78%
Revenue beat(4)1
Avg Revenue beat(4)-0.61%
Min Revenue beat(4)-1.32%
Max Revenue beat(4)0.78%
Revenue beat(8)3
Avg Revenue beat(8)-0.91%
Revenue beat(12)4
Avg Revenue beat(12)0.7%
Revenue beat(16)6
Avg Revenue beat(16)-3.38%
PT rev (1m)-0.82%
PT rev (3m)7.06%
EPS NQ rev (1m)0.6%
EPS NQ rev (3m)2.84%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.56%
Revenue NQ rev (1m)0.5%
Revenue NQ rev (3m)2.16%
Revenue NY rev (1m)0%
Revenue NY rev (3m)2.74%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.57 | ||
| Fwd PE | 13.33 | ||
| P/S | 4.49 | ||
| P/FCF | 16.1 | ||
| P/OCF | 12.58 | ||
| P/B | 6.23 | ||
| P/tB | N/A | ||
| EV/EBITDA | 11.26 |
EPS(TTM)8.31
EY6.87%
EPS(NY)9.08
Fwd EY7.5%
FCF(TTM)7.52
FCFY6.21%
OCF(TTM)9.62
OCFY7.95%
SpS26.96
BVpS19.43
TBVpS-7.12
PEG (NY)1.29
PEG (5Y)1.79
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.87% | ||
| ROE | 33.51% | ||
| ROCE | 25.54% | ||
| ROIC | 23.17% | ||
| ROICexc | 25.87% | ||
| ROICexgc | 181.05% | ||
| OM | 32.76% | ||
| PM (TTM) | 24.15% | ||
| GM | 75.69% | ||
| FCFM | 27.88% |
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-Score6
Asset Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.61 | ||
| Debt/FCF | 2.1 | ||
| Debt/EBITDA | 0.99 | ||
| Cap/Depr | 70.27% | ||
| Cap/Sales | 7.8% | ||
| Interest Coverage | 18.56 | ||
| Cash Conversion | 81.35% | ||
| Profit Quality | 115.46% | ||
| Current Ratio | 0.79 | ||
| Quick Ratio | 0.61 | ||
| Altman-Z | 3.89 |
F-Score6
WACC4.66%
ROIC/WACC4.97
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)18.6%
EPS 3Y7.48%
EPS 5Y8.14%
EPS Q2Q%26.67%
EPS Next Y11.31%
EPS Next 2Y7.7%
EPS Next 3Y7.64%
EPS Next 5Y6.52%
Revenue 1Y (TTM)11.57%
Revenue growth 3Y5.56%
Revenue growth 5Y1.24%
Sales Q2Q%11.87%
Revenue Next Year7.74%
Revenue Next 2Y4.8%
Revenue Next 3Y4.01%
Revenue Next 5Y3.39%
EBIT growth 1Y54.44%
EBIT growth 3Y14.18%
EBIT growth 5Y7.57%
EBIT Next Year30.73%
EBIT Next 3Y11.41%
EBIT Next 5Y9.7%
FCF growth 1Y11.95%
FCF growth 3Y4.49%
FCF growth 5Y3.96%
OCF growth 1Y22.23%
OCF growth 3Y5.34%
OCF growth 5Y5.28%