NOVARTIS AG-SPONSORED ADR (NVS)
US66987V1098 - ADR
We assign a fundamental rating of 7 out of 10 to NVS. NVS was compared to 193 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 Finally NVS also has an excellent dividend rating. With these ratings, NVS could be worth investigating further for value and dividend 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 has a Return On Assets of 18.66%. This is amongst the best in the industry. NVS outperforms 98.43% of its industry peers.
The Return On Equity of NVS (44.37%) is better than 96.34% of its industry peers.
With an excellent Return On Invested Capital value of 20.91%, NVS belongs to the best of the industry, outperforming 96.34% of the companies in the same industry.
NVS had an Average Return On Invested Capital over the past 3 years of 11.23%. This is significantly below the industry average of 43.18%.
The last Return On Invested Capital (20.91%) for NVS is above the 3 year average (11.23%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.66% | ||
| ROE | 44.37% | ||
| ROIC | 20.91% |
ROA(3y)13%
ROA(5y)11.05%
ROE(3y)26.35%
ROE(5y)22.89%
ROIC(3y)11.23%
ROIC(5y)11.01%
1.3 Margins
NVS has a Profit Margin of 35.25%. This is amongst the best in the industry. NVS outperforms 97.38% of its industry peers.
In the last couple of years the Profit Margin of NVS has grown nicely.
The Operating Margin of NVS (30.55%) is better than 94.24% 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 74.99%, NVS belongs to the top of the industry, outperforming 82.20% 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 | 30.55% | ||
| PM (TTM) | 35.25% | ||
| GM | 74.99% |
OM growth 3Y3.15%
OM growth 5Y4.74%
PM growth 3Y25.3%
PM growth 5Y3.04%
GM growth 3Y1.43%
GM growth 5Y1.03%
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 3.74 indicates that NVS is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 3.74, NVS is doing good in the industry, outperforming 76.96% of the companies in the same industry.
The Debt to FCF ratio of NVS is 2.07, which is a good value as it means it would take NVS, 2.07 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 2.07, NVS belongs to the best of the industry, outperforming 94.24% of the companies in the same industry.
NVS has a Debt/Equity ratio of 0.47. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.47, NVS is not doing good in the industry: 63.87% of the companies in the same industry are doing better.
Although NVS does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.47 | ||
| Debt/FCF | 2.07 | ||
| Altman-Z | 3.74 |
ROIC/WACC4.38
WACC4.77%
2.3 Liquidity
A Current Ratio of 0.90 indicates that NVS may have some problems paying its short term obligations.
NVS has a Current ratio of 0.90. This is amonst the worse of the industry: NVS underperforms 88.48% of its industry peers.
NVS has a Quick Ratio of 0.90. 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 0.71 is on the low side compared to the rest of the industry. NVS is outperformed by 89.53% of its industry peers.
NVS does not score too well on the current and quick ratio evaluation. However, as it has 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 | 0.9 | ||
| Quick Ratio | 0.71 |
3. Growth
3.1 Past
NVS shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.17%.
NVS shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.11% yearly.
NVS shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -18.26%.
Measured over the past years, NVS shows a small growth in Revenue. The Revenue has been growing by 0.28% on average per year.
EPS 1Y (TTM)7.17%
EPS 3Y6.08%
EPS 5Y6.11%
EPS Q2Q%12.93%
Revenue 1Y (TTM)-18.26%
Revenue growth 3Y-2.21%
Revenue growth 5Y0.28%
Sales Q2Q%8.84%
3.2 Future
The Earnings Per Share is expected to grow by 6.65% on average over the next years.
Based on estimates for the next years, NVS will show a small growth in Revenue. The Revenue will grow by 3.22% on average per year.
EPS Next Y12.24%
EPS Next 2Y10.05%
EPS Next 3Y8.95%
EPS Next 5Y6.65%
Revenue Next Year7.56%
Revenue Next 2Y6.04%
Revenue Next 3Y4.7%
Revenue Next 5Y3.22%
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.
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
Based on the Price/Earnings ratio of 13.02, the valuation of NVS can be described as correct.
Based on the Price/Earnings ratio, NVS is valued cheaply inside the industry as 89.01% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.73, NVS is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 11.50, the valuation of NVS can be described as reasonable.
Based on the Price/Forward Earnings ratio, NVS is valued cheaper than 84.82% of the companies in the same industry.
NVS is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.83, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.02 | ||
| Fwd PE | 11.5 |
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 86.39% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, NVS is valued cheaper than 87.43% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 14.76 | ||
| EV/EBITDA | 9.94 |
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)1.06
PEG (5Y)2.13
EPS Next 2Y10.05%
EPS Next 3Y8.95%
5. Dividend
5.1 Amount
NVS has a Yearly Dividend Yield of 3.79%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.42, NVS pays a better dividend. On top of this NVS pays more dividend than 94.24% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, NVS pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.79% |
5.2 History
The dividend of NVS has a limited annual growth rate of 2.97%.
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)2.97%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
NVS pays out 43.31% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of NVS is growing, but earnings are growing more, so the dividend growth is sustainable.
DP43.31%
EPS Next 2Y10.05%
EPS Next 3Y8.95%
NOVARTIS AG-SPONSORED ADR
NYSE:NVS (12/20/2024, 8:04:00 PM)
After market: 97.11 0 (0%)97.11
+0.34 (+0.35%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners39.02%
Inst Owner Change-3.64%
Ins Owners0.01%
Ins Owner ChangeN/A
Market Cap194.15B
Analysts70.34
Price Target120.44 (24.02%)
Short Float %0.24%
Short Ratio3.83
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.79% |
Dividend Growth(5Y)2.97%
DP43.31%
Div Incr Years4
Div Non Decr Years4
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.51%
Min EPS beat(2)3.24%
Max EPS beat(2)3.78%
EPS beat(4)3
Avg EPS beat(4)1.25%
Min EPS beat(4)-7.44%
Max EPS beat(4)5.4%
EPS beat(8)7
Avg EPS beat(8)3.78%
EPS beat(12)8
Avg EPS beat(12)2.38%
EPS beat(16)10
Avg EPS beat(16)1.72%
Revenue beat(2)0
Avg Revenue beat(2)-1.05%
Min Revenue beat(2)-1.32%
Max Revenue beat(2)-0.78%
Revenue beat(4)1
Avg Revenue beat(4)-1.46%
Min Revenue beat(4)-4.78%
Max Revenue beat(4)1.02%
Revenue beat(8)3
Avg Revenue beat(8)-0.81%
Revenue beat(12)3
Avg Revenue beat(12)-0.86%
Revenue beat(16)5
Avg Revenue beat(16)-0.45%
PT rev (1m)-1.13%
PT rev (3m)-3.47%
EPS NQ rev (1m)1.27%
EPS NQ rev (3m)3.06%
EPS NY rev (1m)1.27%
EPS NY rev (3m)1.65%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.81%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.08%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.02 | ||
| Fwd PE | 11.5 | ||
| P/S | 3.89 | ||
| P/FCF | 14.76 | ||
| P/OCF | 11.68 | ||
| P/B | 4.89 | ||
| P/tB | N/A | ||
| EV/EBITDA | 9.94 |
EPS(TTM)7.46
EY7.68%
EPS(NY)8.44
Fwd EY8.7%
FCF(TTM)6.58
FCFY6.78%
OCF(TTM)8.31
OCFY8.56%
SpS24.98
BVpS19.84
TBVpS-4.83
PEG (NY)1.06
PEG (5Y)2.13
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.66% | ||
| ROE | 44.37% | ||
| ROCE | 23.46% | ||
| ROIC | 20.91% | ||
| ROICexc | 24.55% | ||
| ROICexgc | 224.21% | ||
| OM | 30.55% | ||
| PM (TTM) | 35.25% | ||
| GM | 74.99% | ||
| FCFM | 26.34% |
ROA(3y)13%
ROA(5y)11.05%
ROE(3y)26.35%
ROE(5y)22.89%
ROIC(3y)11.23%
ROIC(5y)11.01%
ROICexc(3y)14.26%
ROICexc(5y)13.39%
ROICexgc(3y)76.79%
ROICexgc(5y)62.36%
ROCE(3y)13.16%
ROCE(5y)13.01%
ROICexcg growth 3Y23.14%
ROICexcg growth 5Y25.98%
ROICexc growth 3Y13.69%
ROICexc growth 5Y16.56%
OM growth 3Y3.15%
OM growth 5Y4.74%
PM growth 3Y25.3%
PM growth 5Y3.04%
GM growth 3Y1.43%
GM growth 5Y1.03%
F-Score5
Asset Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.47 | ||
| Debt/FCF | 2.07 | ||
| Debt/EBITDA | 0.88 | ||
| Cap/Depr | 57.49% | ||
| Cap/Sales | 6.94% | ||
| Interest Coverage | 17.36 | ||
| Cash Conversion | 78.08% | ||
| Profit Quality | 74.73% | ||
| Current Ratio | 0.9 | ||
| Quick Ratio | 0.71 | ||
| Altman-Z | 3.74 |
F-Score5
WACC4.77%
ROIC/WACC4.38
Cap/Depr(3y)39.69%
Cap/Depr(5y)39.56%
Cap/Sales(3y)6.27%
Cap/Sales(5y)5.73%
Profit Quality(3y)98.49%
Profit Quality(5y)105.89%
High Growth Momentum
Growth
EPS 1Y (TTM)7.17%
EPS 3Y6.08%
EPS 5Y6.11%
EPS Q2Q%12.93%
EPS Next Y12.24%
EPS Next 2Y10.05%
EPS Next 3Y8.95%
EPS Next 5Y6.65%
Revenue 1Y (TTM)-18.26%
Revenue growth 3Y-2.21%
Revenue growth 5Y0.28%
Sales Q2Q%8.84%
Revenue Next Year7.56%
Revenue Next 2Y6.04%
Revenue Next 3Y4.7%
Revenue Next 5Y3.22%
EBIT growth 1Y-4.16%
EBIT growth 3Y0.87%
EBIT growth 5Y5.03%
EBIT Next Year45.15%
EBIT Next 3Y17.08%
EBIT Next 5Y11.71%
FCF growth 1Y19.5%
FCF growth 3Y1.89%
FCF growth 5Y0.14%
OCF growth 1Y18.65%
OCF growth 3Y1.94%
OCF growth 5Y0.26%