Amgen Inc Valuation – March 2019 #AMGN

Company Profile (excerpt from Reuters): Amgen Inc., incorporated on October 31, 1986, is a biotechnology company. The Company discovers, develops, manufactures and delivers various human therapeutics. The Company operates in the human therapeutics segment. The Company’s marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as KYPROLIS (carfilzomib), Vectibix (panitumumab), Nplate (romiplostim), Repatha (evolocumab), BLINCYTO (blinatumomab), IMLYGIC (talimogene laherparepvec) and Corlanor (ivabradine). The Company focuses its research and development on human therapeutics for the treatment of serious illness in the areas of oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology and neuroscience.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMGN – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $116,179,300,700 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.79 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 99.02% Pass
6. Moderate PEmg Ratio PEmg < 20 18.15 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.57 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.79 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.29
MG Growth Estimate 6.62%
MG Value $223.61
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $149.20
MG Value based on 0% Growth $87.46
Market Implied Growth Rate 4.82%
Current Price $186.70
% of Intrinsic Value 83.49%

Amgen, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $7.14 in 2015 to an estimated $10.29 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 4.82% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Amgen, Inc. revealed the company was trading above its Graham Number of $76.93. The company pays a dividend of $5.28 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.15, which was below the industry average of 47.6, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-25.43.

Amgen, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$25.43
Graham Number $76.93
PEmg 18.15
Current Ratio 2.79
PB Ratio 9.57
Current Dividend $5.28
Dividend Yield 2.83%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $37,618,000,000
Total Current Liabilities $13,488,000,000
Long-Term Debt $29,510,000,000
Total Assets $66,416,000,000
Intangible Assets $22,142,000,000
Total Liabilities $53,916,000,000
Shares Outstanding (Diluted Average) 641,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.25
Dec2018 $12.62
Dec2017 $2.69
Dec2016 $10.24
Dec2015 $9.06
Dec2014 $6.70
Dec2013 $6.64
Dec2012 $5.52
Dec2011 $4.04
Dec2010 $4.79
Dec2009 $4.51
Dec2008 $3.77
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.93
Dec2004 $1.81
Dec2003 $1.69
Dec2002 -$1.21
Dec2001 $1.03
Dec2000 $1.05
Dec1999 $1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.29
Dec2018 $8.63
Dec2017 $6.78
Dec2016 $8.42
Dec2015 $7.14
Dec2014 $5.97
Dec2013 $5.43
Dec2012 $4.73
Dec2011 $4.22
Dec2010 $4.09
Dec2009 $3.60
Dec2008 $3.02
Dec2007 $2.54
Dec2006 $2.11
Dec2005 $1.70
Dec2004 $1.02
Dec2003 $0.65

Recommended Reading:

Other ModernGraham posts about the company

Amgen Inc Valuation – June 2018 $AMGN
6 Best Stocks for Value Investors This Week – 3/26/17
Amgen Inc Valuation – March 2017 $AMGN
21 Best Undervalued Stocks of the Week – 8/27/16
Amgen Inc Valuation – August 2016 $AMGN

Other ModernGraham posts about related companies

AbbVie Inc Valuation – March 2019 #ABBV
Allergan PLC Valuation – February 2019 $AGN
Incyte Corp Valuation – February 2019 $INCY
Regeneron Pharmaceuticals Inc Valuation – February 2019 $REGN
Alexion Pharmaceuticals Inc Valuation – February 2019 $ALXN
Vertex Pharmaceuticals Inc Valuation – February 2019 $VRTX
Perrigo Company Valuation – February 2019 $PRGO
Eli Lilly and Co Valuation – January 2019 $LLY
Zoetis Inc Valuation – January 2019 $ZTS
Gilead Sciences Inc Valuation – January 2019 $GILD

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amgen Inc Valuation – June 2018 $AMGN

Company Profile (excerpt from Reuters): Amgen Inc., incorporated on October 31, 1986, is a biotechnology company. The Company discovers, develops, manufactures and delivers various human therapeutics. The Company operates in the human therapeutics segment. The Company’s marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as KYPROLIS (carfilzomib), Vectibix (panitumumab), Nplate (romiplostim), Repatha (evolocumab), BLINCYTO (blinatumomab), IMLYGIC (talimogene laherparepvec) and Corlanor (ivabradine). The Company focuses its research and development on human therapeutics for the treatment of serious illness in the areas of oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology and neuroscience.

AMGN Chart

AMGN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMGN – June 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $122,514,875,748 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.88 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 90.93% Pass
6. Moderate PEmg Ratio PEmg < 20 21.53 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.43 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.88 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.10 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.60
MG Growth Estimate 6.62%
MG Value $187.01
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $124.70
MG Value based on 0% Growth $73.10
Market Implied Growth Rate 6.51%
Current Price $185.15
% of Intrinsic Value 99.01%

Amgen, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $5.97 in 2014 to an estimated $8.6 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.51% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Amgen, Inc. revealed the company was trading above its Graham Number of $99.3. The company pays a dividend of $4.6 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.53, which was below the industry average of 37.68, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.89.

Amgen, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$20.89
Graham Number $99.30
PEmg 21.53
Current Ratio 3.88
PB Ratio 8.43
Current Dividend $4.60
Dividend Yield 2.48%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $40,689,000,000
Total Current Liabilities $10,479,000,000
Long-Term Debt $33,358,000,000
Total Assets $71,164,000,000
Intangible Assets $23,550,000,000
Total Liabilities $55,544,000,000
Shares Outstanding (Diluted Average) 711,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $12.54
Dec2017 $2.69
Dec2016 $10.24
Dec2015 $9.06
Dec2014 $6.70
Dec2013 $6.64
Dec2012 $5.52
Dec2011 $4.04
Dec2010 $4.79
Dec2009 $4.51
Dec2008 $3.77
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.93
Dec2004 $1.81
Dec2003 $1.69
Dec2002 -$1.21
Dec2001 $1.03
Dec2000 $1.05
Dec1999 $1.02
Dec1998 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.60
Dec2017 $6.78
Dec2016 $8.42
Dec2015 $7.14
Dec2014 $5.97
Dec2013 $5.43
Dec2012 $4.73
Dec2011 $4.22
Dec2010 $4.09
Dec2009 $3.60
Dec2008 $3.02
Dec2007 $2.54
Dec2006 $2.11
Dec2005 $1.70
Dec2004 $1.02
Dec2003 $0.65
Dec2002 $0.27

Recommended Reading:

Other ModernGraham posts about the company

6 Best Stocks for Value Investors This Week – 3/26/17
Amgen Inc Valuation – March 2017 $AMGN
21 Best Undervalued Stocks of the Week – 8/27/16
Amgen Inc Valuation – August 2016 $AMGN
Amgen Inc Valuation – February 2016 $AMGN

Other ModernGraham posts about related companies

Allergan PLC Valuation – May 2018 $AGN
Incyte Corp Valuation – April 2018 $INCY
Regeneron Pharmaceuticals Inc Valuation – April 2018 $REGN
Alexion Pharmaceuticals Inc Valuation – April 2018 $ALXN
Vertex Pharmaceuticals Inc Valuation – April 2018 $VRTX
AmerisourceBergen Corp Valuation – April 2018 $ABC
Perrigo Company PLC Valuation – April 2018 $PRGO
AbbVie Inc Valuation – April 2018 $ABBV
Eli Lilly and Co. Valuation – March 2018 $LLY
Zoetis Inc Valuation – March 2018 $ZTS

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amgen Inc Valuation – March 2017 $AMGN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amgen Inc (AMGN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amgen Inc. is a biotechnology company. The Company discovers, develops, manufactures and delivers various human therapeutics. It operates in human therapeutics segment. Its marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as KYPROLIS (carfilzomib), Vectibix (panitumumab), Nplate (romiplostim), Repatha (evolocumab), BLINCYTO (blinatumomab), IMLYGIC (talimogene laherparepvec) and Corlanor (ivabradine). It focuses on human therapeutics for the treatment of serious illness in the areas of oncology/hematology, cardiovascular disease and neuroscience. Its product candidates in Phase III include Erenumab for episodic migraine, Aranesp for myelodysplastic syndromes, BLINCYTO for acute lymphoblastic leukemia and IMLYGIC for metastatic melanoma.

AMGN Chart

AMGN data by YCharts

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of AMGN – March 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $122,480,021,905 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.11 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 137.95% Pass
6. Moderate PEmg Ratio PEmg < 20 17.18 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.26 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.11 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.87 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $9.81
MG Growth Estimate 12.09%
MG Value $320.69
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $142.27
MG Value based on 0% Growth $83.40
Market Implied Growth Rate 4.34%
Current Price $168.61
% of Intrinsic Value 52.58%

Amgen, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.43 in 2013 to an estimated $9.81 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.34% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Amgen, Inc. revealed the company was trading above its Graham Number of $103.67. The company pays a dividend of $4 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.18, which was below the industry average of 28.95, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.31.

Amgen, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$2.31
Graham Number $103.67
PEmg 17.18
Current Ratio 4.11
PB Ratio 4.26
Current Dividend $4.00
Dividend Yield 2.37%
Number of Consecutive Years of Dividend Growth 7

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $46,010,000,000
Total Current Liabilities $11,204,000,000
Long-Term Debt $30,193,000,000
Total Assets $77,626,000,000
Intangible Assets $25,030,000,000
Total Liabilities $47,751,000,000
Shares Outstanding (Diluted Average) 754,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.80
Dec2016 $10.24
Dec2015 $9.06
Dec2014 $6.70
Dec2013 $6.64
Dec2012 $5.52
Dec2011 $4.04
Dec2010 $4.79
Dec2009 $4.51
Dec2008 $3.77
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.93
Dec2004 $1.81
Dec2003 $1.69
Dec2002 -$1.21
Dec2001 $1.03
Dec2000 $1.05
Dec1999 $1.02
Dec1998 $0.82
Dec1997 $0.59

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.81
Dec2016 $8.42
Dec2015 $7.14
Dec2014 $5.97
Dec2013 $5.43
Dec2012 $4.73
Dec2011 $4.22
Dec2010 $4.09
Dec2009 $3.60
Dec2008 $3.02
Dec2007 $2.54
Dec2006 $2.11
Dec2005 $1.70
Dec2004 $1.02
Dec2003 $0.65
Dec2002 $0.27
Dec2001 $0.98

Recommended Reading:

Other ModernGraham posts about the company

Amgen Inc Valuation – February 2016 $AMGN
5 Undervalued Companies with a Low Beta – October 2015
10 Best Stocks For Value Investors This Week – 9/26/15
Amgen Inc. Analysis – September 2015 Update $AMGN
The Best Companies of the Pharmaceuticals Industry – August 2015

Other ModernGraham posts about related companies

Ligand Pharmaceuticals Inc Valuation – Initial Coverage $LGND
Pfizer Inc Valuation – March 2017 $PFE
Supernus Pharmaceuticals Inc Valuation – Initial Coverage $SUPN
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Spectrum Pharmaceuticals Inc Valuation – Initial Coverage $SPPI
Abbott Laboratories Valuation – January 2017 $ABT
Johnson & Johnson Valuation – January 2017 $JNJ
Allergan plc Valuation – January 2017 $AGN
Impax Laboratories Inc – Initial Coverage $IPXL
Alexion Pharmaceuticals Inc Valuation – December 2016 $ALXN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amgen Inc Valuation – August 2016 $AMGN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amgen Inc (AMGN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amgen Inc. is a biotechnology company. The Company discovers, develops, manufactures and delivers various human therapeutics. The Company’s business segment is human therapeutics. Its marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as Vectibix (panitumumab), Nplate (romiplostim) and Corlanor (ivabradine). The Company focuses its research and development on human therapeutics for the treatment of serious illness in the areas of oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology and neuroscience. Its products in Phase III programs include Aranesp for Myelodysplastic syndromes; ENBREL for Psoriatic arthritis and Rheumatoid arthritis remission; IMLYGIC for Metastatic melanoma, and Kyprolis for Multiple myeloma.

AMGN Chart

AMGN data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMGN – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $125,394,167,882 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.97 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 133.78% Pass
6. Moderate PEmg Ratio PEmg < 20 20.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.29 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.87 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

AMGN value chart August 2016

EPSmg $8.41
MG Growth Estimate 11.67%
MG Value $267.63
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $121.89
MG Value based on 0% Growth $71.45
Market Implied Growth Rate 5.92%
Current Price $171.05
% of Intrinsic Value 63.91%

Amgen, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.73 in 2012 to an estimated $8.41 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.92% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Amgen, Inc. revealed the company was trading above its Graham Number of $96.05. The company pays a dividend of $3.58 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.35, which was below the industry average of 38.69, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.16.

Amgen, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

AMGN charts August 2016

Net Current Asset Value (NCAV) -$3.16
Graham Number $96.05
PEmg 20.35
Current Ratio 3.97
PB Ratio 4.29
Current Dividend $3.58
Dividend Yield 2.09%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $42,947,000,000
Total Current Liabilities $10,830,000,000
Long-Term Debt $27,928,000,000
Total Assets $75,471,000,000
Intangible Assets $25,867,000,000
Total Liabilities $45,338,000,000
Shares Outstanding (Diluted Average) 756,000,000

Earnings Per Share History

Next Fiscal Year Estimate $10.19
Dec2015 $9.06
Dec2014 $6.70
Dec2013 $6.64
Dec2012 $5.52
Dec2011 $4.04
Dec2010 $4.79
Dec2009 $4.51
Dec2008 $3.77
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.93
Dec2004 $1.81
Dec2003 $1.69
Dec2002 -$1.21
Dec2001 $1.03
Dec2000 $1.05
Dec1999 $1.02
Dec1998 $0.82
Dec1997 $0.59
Dec1996 $0.61

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $8.41
Dec2015 $7.14
Dec2014 $5.97
Dec2013 $5.43
Dec2012 $4.73
Dec2011 $4.22
Dec2010 $4.09
Dec2009 $3.60
Dec2008 $3.02
Dec2007 $2.54
Dec2006 $2.11
Dec2005 $1.70
Dec2004 $1.02
Dec2003 $0.65
Dec2002 $0.27
Dec2001 $0.98
Dec2000 $0.90

Recommended Reading:

Other ModernGraham posts about the company

Amgen Inc Valuation – February 2016 $AMGN
5 Undervalued Companies with a Low Beta – October 2015
10 Best Stocks For Value Investors This Week – 9/26/15
Amgen Inc. Analysis – September 2015 Update $AMGN
Amgen Inc Valuation – February 2016 $AMGN

Other ModernGraham posts about related companies

Pfizer Inc Valuation – August 2016 $PFE
Abbott Laboratories Valuation – August 2016 $ABT
Johnson & Johnson Valuation – August 2016 $JNJ
Regeneron Pharmaceuticals Inc Valuation – August 2016 $REGN
AmerisourceBergen Corp Valuation – July 2016 $ABC
Perrigo Co PLC Valuation – July 2016 $PRGO
AbbVie Inc Valuation – July 2016 $ABBV
Gilead Sciences Inc Valuation – July 2016 $GILD
Eli Lilly and Company Valuation – July 2016 $LLY
Zoetis Inc Valuation – June 2016 $ZTS

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amgen Inc Valuation – February 2016 $AMGN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amgen Inc (AMGN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amgen Inc. (Amgen) is a biotechnology company. The Company is engaged in discovering, developing, manufacturing and delivering human therapeutics. The Company’s sales and marketing forces are located in the United States and Europe. In the United States, it sells its products to pharmaceutical wholesale distributors. The Company also markets certain products directly to consumers through direct-to-consumer print and television advertising, as well as through the Internet. Outside the United States, the Company sells its products to healthcare providers and/or pharmaceutical wholesale distributors. The Company’s products include Neulasta (pegfilgrastim)/NEUPOGEN (filgrastim), Enbrel (etanercept), XGEVA/Prolia (denosumab), ESAs (erythropoiesis-stimulating agents), Sensipar/Mimpara (cinacalcet), Kyprolis and Evolocumab, among others.

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ModernGraham Valuation of AMGN

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $115,869,714,418 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.44 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 137.48% Pass
6. Moderate PEmg Ratio PEmg < 20 17.68 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.12 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.44 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.98 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

AMGN value chart February 2016

EPSmg $8.54
MG Growth Estimate 12.10%
MG Value $279.39
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $123.87
MG Value based on 0% Growth $72.61
Market Implied Growth Rate 4.59%
Current Price $151.07
% of Intrinsic Value 54.07%

Amgen, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.73 in 2012 to an estimated $8.54 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.59% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price. Amgen, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

AMGN charts February 2016

Net Current Asset Value (NCAV) -$6.49
Graham Number $94.23
PEmg 17.68
Current Ratio 4.44
PB Ratio 4.12
Dividend Yield 2.09%
Number of Consecutive Years of Dividend Growth 6

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Dec2015
Total Current Assets $38,518,000,000
Total Current Liabilities $8,667,000,000
Long-Term Debt $29,306,000,000
Total Assets $71,576,000,000
Intangible Assets $26,428,000,000
Total Liabilities $43,493,000,000
Shares Outstanding (Diluted Average) 766,000,000

Earnings Per Share History

Next Fiscal Year Estimate $10.60
Dec2015 $9.06
Dec2014 $6.70
Dec2013 $6.64
Dec2012 $5.52
Dec2011 $4.04
Dec2010 $4.79
Dec2009 $4.51
Dec2008 $3.77
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.93
Dec2004 $1.81
Dec2003 $1.69
Dec2002 -$1.21
Dec2001 $1.03
Dec2000 $1.05
Dec1999 $1.02
Dec1998 $0.82
Dec1997 $0.59
Dec1996 $0.61

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $8.54
Dec2015 $7.14
Dec2014 $5.97
Dec2013 $5.43
Dec2012 $4.73
Dec2011 $4.22
Dec2010 $4.09
Dec2009 $3.60
Dec2008 $3.02
Dec2007 $2.54
Dec2006 $2.11
Dec2005 $1.70
Dec2004 $1.02
Dec2003 $0.65
Dec2002 $0.27
Dec2001 $0.98
Dec2000 $0.90

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – October 2015
The Best Companies of the Pharmaceuticals Industry – August 2015
The 10 Best Stocks For Value Investors This Week – 6/20/15
Amgen Inc. Analysis – June 2015 Update $AMGN
18 Companies in the Spotlight This Week – 3/21/15

Other ModernGraham posts about related companies

Pfizer Inc Valuation – February 2016 $PFE
Biogen Inc Valuation – February 2016 Update $BIIB
Perrigo Co PLC Valuation – January 2016 Update $PRGO
Pfizer Inc Valuation – February 2016 $PFE
Biogen Inc Valuation – February 2016 Update $BIIB
Perrigo Co PLC Valuation – January 2016 Update $PRGO
Johnson & Johnson Valuation – January 2016 Update $JNJ
Mylan NV Valuation – January 2016 Update $MYL
Celgene Corp Valuation – December 2015 Update $CELG
Merck & Co Valuation – November 2015 Update $MRK

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amgen Inc. Analysis – September 2015 Update $AMGN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Amgen Inc. (AMGN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amgen Inc. (Amgen) is a biotechnology company. The Company is engaged in discovering, developing, manufacturing and delivering human therapeutics. The Company’s sales and marketing forces are located in the United States and Europe. In the United States, it sells its products to pharmaceutical wholesale distributors. The Company also markets certain products directly to consumers through direct-to-consumer print and television advertising, as well as through the Internet. Outside the United States, the Company sells its products to healthcare providers and/or pharmaceutical wholesale distributors. The Company’s products include Neulasta (pegfilgrastim)/NEUPOGEN (filgrastim), Enbrel (etanercept), XGEVA/Prolia (denosumab), ESAs (erythropoiesis-stimulating agents), Sensipar/Mimpara (cinacalcet), Kyprolis and Evolocumab, among others.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of AMGN – September 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $110,697,004,734 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 5.48 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 140.33% Pass
6. Moderate PEmg Ratio PEmg < 20 20.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.08 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 5.48 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

AMGN value Chart September 2015

EPSmg $7.04
MG Growth Estimate 9.95%
MG Value $200.07
Opinion Undervalued
MG Value based on 3% Growth $102.13
MG Value based on 0% Growth $59.87
Market Implied Growth Rate 6.11%
Current Price $145.99
% of Intrinsic Value 72.97%

Amgen Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the short dividend history and high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $4.23 in 2011 to an estimated $7.04 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.11% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amgen Inc. (AMGN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

AMGN Charts September 2015

Net Current Asset Value (NCAV) -$7.80
Graham Number $84.46
PEmg 20.73
Current Ratio 5.48
PB Ratio 4.08
Dividend Yield 1.92%
Number of Consecutive Years of Dividend Growth 5

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $37,736,000,000
Total Current Liabilities $6,891,000,000
Long-Term Debt $30,702,000,000
Total Assets $71,209,000,000
Intangible Assets $26,711,000,000
Total Liabilities $43,725,000,000
Shares Outstanding (Diluted Average) 768,000,000

Earnings Per Share History

Next Fiscal Year Estimate $8.77
Dec14 $6.70
Dec13 $6.64
Dec12 $5.52
Dec11 $4.04
Dec10 $4.79
Dec09 $4.51
Dec08 $3.90
Dec07 $2.82
Dec06 $2.48
Dec05 $2.93
Dec04 $1.81
Dec03 $1.69
Dec02 -$1.21
Dec01 $1.03
Dec00 $1.05
Dec99 $1.02
Dec98 $0.82
Dec97 $0.59
Dec96 $0.61
Dec95 $0.47

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $7.04
Dec14 $5.97
Dec13 $5.43
Dec12 $4.74
Dec11 $4.23
Dec10 $4.12
Dec09 $3.63
Dec08 $3.06
Dec07 $2.54
Dec06 $2.11
Dec05 $1.70
Dec04 $1.02
Dec03 $0.65
Dec02 $0.27
Dec01 $0.98
Dec00 $0.90
Dec99 $0.79

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Pharmaceuticals Industry – August 2015
The 10 Best Stocks For Value Investors This Week – 6/20/15
Amgen Inc. Analysis – June 2015 Update $AMGN
18 Companies in the Spotlight This Week – 3/21/15
Amgen Inc. Quarterly Valuation – March 2015 $AMGN

Other ModernGraham posts about related companies

Pfizer Inc Analysis – September 2015 Update $PFE
Johnson & Johnson Analysis – September 2015 Update $JNJ
Celgene Corporation Analysis – September 2015 Update $CELG
Allergan PLC Analysis – August 2015 Update $AGN
The Best Companies of the Pharmaceuticals Industry – August 2015
Alexion Pharmaceuticals Inc. Analysis – August 2015 Update $ALXN
Akorn Inc. Analysis – Initial Coverage $AKRX
Zoetis Inc. Analysis – July 2015 Update $ZTS
Mallinckrodt PLC Analysis – Initial Coverage $MNK
Biogen IDEC Inc. Analysis – July 2015 Update $BIIB

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Amgen Inc. Analysis – June 2015 Update $AMGN

500px-Amgen.svgAmgen Inc. (AMGN) has shown very strong earnings growth over the last several years, which when combined with the company’s healthy dividend yield should immediately intrigue many investors. In fact, multiple analysts have recently given positive sentiment towards the company. For example, Seeking Alpha contributor DoctoRX recently wrote that the company’s strong history creates an expectation that its new drugs will do well despite the risk. Roadmap2Retire shares that view, believing that the company will see continued earnings growth into the future. These articles focus on great qualitative considerations that must be taken into account when making investment decisions.

However, Benjamin Graham, the father of value investing, taught that investors must take emotion out of the equation, as the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here’s a look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

AMGN Chart

AMGN data by YCharts

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – Earnings per share has increased by at least 1/3rd over the last 10 years, using 3-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $158.84
MG Value $213.75
MG Opinion Undervalued
Value Based on 3% Growth $104.35
Value Based on 0% Growth $61.17
Market Implied Growth Rate 6.79%
Net Current Asset Value (NCAV) -$9.59
PEmg 22.07
Current Ratio 5.53
PB Ratio 4.61

Balance Sheet – March 2015

Current Assets $35,064,000,000
Current Liabilities $6,336,000,000
Total Debt $29,841,000,000
Total Assets $68,952,000,000
Intangible Assets $26,986,000,000
Total Liabilities $42,446,000,000
Outstanding Shares 770,000,000

Earnings Per Share

2015 (estimate) $9.23
2014 $6.70
2013 $6.64
2012 $5.52
2011 $4.04
2010 $4.79
2009 $4.51
2008 $3.77
2007 $2.82
2006 $2.48
2005 $2.93

Earnings Per Share – ModernGraham

2015 (estimate) $7.20
2014 $5.97
2013 $5.43
2012 $4.73
2011 $4.22
2010 $4.09

Dividend History

AMGN Dividend Chart

AMGN Dividend data by YCharts

Competitive Comparison

Amgen is very attractive when compared to some of its competitors. For example, ModernGraham valuations of both Eli Lilly (LLY) and Merck (MRK) indicate both of those companies are not suitable for either the Defensive Investor or the Enterprising Investor, and both are considerably overvalued at the present time.

Conclusion

Amgen performs well in the ModernGraham model and is suitable for Enterprising Investors. The Defensive Investor is concerned with the low current ratio, along with the poor PEmg and PB ratios, while the Enterprising Investor has no initial concerns. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $4.22 in 2011 to an estimated $7.20 for 2015. This is a strong level of growth and is well above the market’s implied estimate of 6.79% annual earnings growth over the next 7-10 years.

Here, actual growth in EPSmg over the last several years has averaged nearly 14.1% annually, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still estimates a growth figure much higher than the market’s implied rate. Therefore, the model returns an estimate of intrinsic value well above the current price, indicating the company is significantly undervalued at the present time.

Enterprising Investors should take this information regarding the company’s valuation and proceed with further research into whether the company would be suitable for individual portfolios, as it has passed a ModernGraham review.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Amgen Inc. Quarterly Valuation – March 2015 $AMGN

500px-Amgen.svg

Amgen Inc. passes all of the initial requirements of the Enterprising Investor but not the more conservative Defensive Investor, who is concerned about the short dividend history along with the high PEmg and PB ratios. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $4.09 in 2010 to $5.97 for 2014. This level of demonstrated growth does not support the market’s implied estimate for earnings growth of 9.42% over the next 7-10 years. The ModernGraham valuation model takes a conservative approach and reduces the historical growth, assuming that some slowdown will occur. Therefore, the model returns an estimate of intrinsic value falling below the current price, indicating the company is overvalued at the present time.

Be sure to check out previous ModernGraham valuations of Amgen Inc. (AMGN) for a greater perspective!

Read the full valuation on Seeking Alpha!

AMGN Chart

AMGN data by YCharts

Disclaimer: The author did not hold a position in Amgen Inc. (AMGN) at the time of publication and had no intention of changing that position within the next 72 hours. Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Amgen Inc. Quarterly Valuation – December 2014 $AMGN

500px-Amgen.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Dow Components to Research – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Amgen Inc. (AMGN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amgen Inc. (Amgen) is a global biotechnology company that discovers, develops, manufactures and delivers human therapeutics. It focuses its research and development activities on human therapeutics for in the areas of oncology, hematology, inflammation, bone health, nephrology, cardiovascular and general medicine, which includes neuroscience. The Company’s marketed products include Neulasta, NEUPOGEN, ENBREL, Aranesp, EPOGEN, Sensipar/Mimpara, XGEVA and Prolia. In addition to its marketed products, the Company has various product candidates in mid-to late-stage of development. The Company markets its principal products primarily in the United States in cancer care, inflammation, nephrology and bone disease. As of February 17, 2014, the Company has 16 Phase III programs.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $164.53
MG Value $174.70
MG Opinion Fairly Valued
Value Based on 3% Growth $95.21
Value Based on 0% Growth $55.81
Market Implied Growth Rate 8.28%
Net Current Asset Value (NCAV) -$12.19
PEmg 25.06
Current Ratio 4.22
PB Ratio 5.01

Balance Sheet – September 2014

Current Assets $36,048,000,000
Current Liabilities $8,551,000,000
Total Debt $30,480,000,000
Total Assets $70,775,000,000
Intangible Assets $27,915,000,000
Total Liabilities $45,450,000,000
Outstanding Shares 771,000,000

Earnings Per Share

2014 (estimate) $8.50
2013 $6.64
2012 $5.52
2011 $4.04
2010 $4.79
2009 $4.51
2008 $3.77
2007 $2.82
2006 $2.48
2005 $2.93
2004 $1.81

Earnings Per Share – ModernGraham

2014 (estimate) $6.57
2013 $5.43
2012 $4.73
2011 $4.22
2010 $4.09
2009 $3.60

Dividend History

Conclusion:

Amgen is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the short dividend history as well as the high PEmg and PB ratios.  The Enterprising Investor, on the other hand, is only concerned by the level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.09 in 2010 to an estimated $6.57 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 8.28% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

Be sure to check out previous ModernGraham valuations of Amgen Inc. (AMGN) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amgen Inc. (AMGN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Amgen Inc. (AMGN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Amgen Inc. Quarterly Stock Valuation – September 2014 $AMGN

500px-Amgen.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – September 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Amgen Inc. (AMGN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Amgen Inc. is a global biotechnology pioneer that discovers, develops, manufactures and delivers human therapeutics. Its medicines help millions of patients in the fight against cancer, kidney disease, rheumatoid arthritis (RA), bone disease, and other serious illnesses. On December 10, 2012, the Company acquired all of the outstanding stock of deCODE Genetics (deCODE). In July 5, 2012, the Company acquired KAI Pharmaceuticals, a privately held company based in South San Francisco. In September 2013, Swedish Orphan Biovitrum AB (publ) (Sobi) announced that they have acquired the full rights to develop and commercialize Kineret (anakinra) from Amgen Inc for all therapeutic indications.
AMGN Chart

AMGN data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period -PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $137.89
MG Value $169.02
MG Opinion Fairly Valued
Value Based on 3% Growth $94.48
Value Based on 0% Growth $55.39
Market Implied Growth Rate 6.33%
Net Current Asset Value (NCAV) -$14.25
PEmg 21.16
Current Ratio 4.36
PB Ratio 4.29

Balance Sheet – 6/30/2014

Current Assets $34,328,000,000
Current Liabilities $7,866,000,000
Total Debt $30,828,000,000
Total Assets $69,534,000,000
Intangible Assets $28,343,000,000
Total Liabilities $45,152,000,000
Outstanding Shares 759,400,000

Earnings Per Share

2014 (estimate) $8.35
2013 $6.64
2012 $5.52
2011 $4.04
2010 $4.79
2009 $4.51
2008 $3.90
2007 $2.82
2006 $2.48
2005 $2.92
2004 $1.79

Earnings Per Share – ModernGraham

2014 (estimate) $6.52
2013 $5.43
2012 $4.74
2011 $4.23
2010 $4.12
2009 $3.63

Dividend History
AMGN Dividend Chart

AMGN Dividend data by YCharts

Conclusion:

Amgen Inc. qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned with the short dividend history as well as the high PEmg and PB ratios.  The Enterprising Investor’s only initial concern is the high level of debt relative to the net current assets.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities.  From a valuation perspective, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.12 in 2010 to an estimated $6.52 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 6.33% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

Be sure to check out the previous ModernGraham valuations of Amgen Inc. (AMGN) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Amgen Inc. (AMGN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Amgen Inc. (AMGN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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