Incyte Corp Valuation – February 2019 $INCY

Company Profile (excerpt from Reuters): Incyte Corporation, incorporated on April 8, 1991, is a biopharmaceutical company. The Company is focused on the discovery, development and commercialization of therapeutics. The Company’s portfolio includes compounds in various stages, ranging from preclinical to late-stage development, and commercialized products, such as JAKAFI (ruxolitinib) and ICLUSIG (ponatinib). The Company has initiated REACH1, a pivotal Phase II trial in steroid-refractory acute graft-versus-host-disease (GVHD) and the first in a registration program for ruxolitinib in GVHD. A proof-of-concept trial of itacitinib, a selective janus associated kinases 1 (JAK1) inhibitor, is ongoing for the treatment of patients with acute GVHD.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INCY – February 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 $17,967,189,642 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.31 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
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 -89.95% Fail
6. Moderate PEmg Ratio PEmg < 20 482.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.41 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 4.31 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.01 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.17
MG Growth Estimate 15.00%
MG Value $6.70
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $2.52
MG Value based on 0% Growth $1.48
Market Implied Growth Rate 236.96%
Current Price $83.94
% of Intrinsic Value 1253.02%

Incyte Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.32 in 2015 to an estimated $0.17 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 236.96% 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 below the price.

At the time of valuation, further research into Incyte Corporation revealed the company was trading above its Graham Number of $12.83. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 482.41, which was above the industry average of 39.51. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.15.

Incyte Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $5.15
Graham Number $12.83
PEmg 482.41
Current Ratio 4.31
PB Ratio 9.41
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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 $1,832,254,000
Total Current Liabilities $425,277,000
Long-Term Debt $17,434,000
Total Assets $2,645,762,000
Intangible Assets $370,957,000
Total Liabilities $719,795,000
Shares Outstanding (Diluted Average) 215,992,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.81
Dec2018 $0.51
Dec2017 -$1.53
Dec2016 $0.54
Dec2015 $0.03
Dec2014 -$0.29
Dec2013 -$0.56
Dec2012 -$0.34
Dec2011 -$1.49
Dec2010 -$0.26
Dec2009 -$2.06
Dec2008 -$1.99
Dec2007 -$1.03
Dec2006 -$0.89
Dec2005 -$1.24
Dec2004 -$2.21
Dec2003 -$2.33
Dec2002 -$2.03
Dec2001 -$2.77
Dec2000 -$0.47
Dec1999 -$0.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.17
Dec2018 -$0.15
Dec2017 -$0.44
Dec2016 $0.03
Dec2015 -$0.32
Dec2014 -$0.53
Dec2013 -$0.75
Dec2012 -$0.97
Dec2011 -$1.31
Dec2010 -$1.23
Dec2009 -$1.62
Dec2008 -$1.43
Dec2007 -$1.28
Dec2006 -$1.52
Dec2005 -$1.92
Dec2004 -$2.16
Dec2003 -$1.97

Recommended Reading:

Other ModernGraham posts about the company

Incyte Corp Valuation – April 2018 $INCY

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Gilead Sciences Inc Valuation – January 2019 $GILD
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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.

Incyte Corp Valuation – April 2018 $INCY

Company Profile (excerpt from Reuters): Incyte Corporation, incorporated on April 8, 1991, is a biopharmaceutical company. The Company is focused on the discovery, development and commercialization of therapeutics. The Company’s portfolio includes compounds in various stages, ranging from preclinical to late-stage development, and commercialized products, such as JAKAFI (ruxolitinib) and ICLUSIG (ponatinib). The Company has initiated REACH1, a pivotal Phase II trial in steroid-refractory acute graft-versus-host-disease (GVHD) and the first in a registration program for ruxolitinib in GVHD. A proof-of-concept trial of itacitinib, a selective janus associated kinases 1 (JAK1) inhibitor, is ongoing for the treatment of patients with acute GVHD.

INCY Chart

INCY data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INCY – April 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 $14,431,968,195 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.01 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
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 -57.22% Fail
6. Moderate PEmg Ratio PEmg < 20 -128.89 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.82 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 4.01 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.01 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.53
MG Growth Estimate 0.04%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$7.67
MG Value based on 0% Growth -$4.49
Market Implied Growth Rate -68.70%
Current Price $68.14
% of Intrinsic Value N/A

Incyte Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.53 in 2014 to an estimated $-0.53 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Incyte Corporation revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -128.89, which was below the industry average of 29.14, 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 $3.95.

Incyte Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.95
Graham Number $0.00
PEmg -128.89
Current Ratio 4.01
PB Ratio 8.82
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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 12/1/2017
Total Current Assets $1,504,854,000
Total Current Liabilities $375,396,000
Long-Term Debt $16,608,000
Total Assets $2,302,582,000
Intangible Assets $392,494,000
Total Liabilities $671,953,000
Shares Outstanding (Diluted Average) 211,123,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.64
Dec2017 -$1.53
Dec2016 $0.54
Dec2015 $0.03
Dec2014 -$0.29
Dec2013 -$0.56
Dec2012 -$0.34
Dec2011 -$1.49
Dec2010 -$0.26
Dec2009 -$2.06
Dec2008 -$1.99
Dec2007 -$1.03
Dec2006 -$0.89
Dec2005 -$1.24
Dec2004 -$2.21
Dec2003 -$2.33
Dec2002 -$2.03
Dec2001 -$2.77
Dec2000 -$0.47
Dec1999 -$0.48
Dec1998 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.53
Dec2017 -$0.44
Dec2016 $0.03
Dec2015 -$0.32
Dec2014 -$0.53
Dec2013 -$0.75
Dec2012 -$0.97
Dec2011 -$1.31
Dec2010 -$1.23
Dec2009 -$1.62
Dec2008 -$1.43
Dec2007 -$1.28
Dec2006 -$1.52
Dec2005 -$1.92
Dec2004 -$2.16
Dec2003 -$1.97
Dec2002 -$1.57

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

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Regeneron Pharmaceuticals Inc Valuation – April 2018 $REGN
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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
Gilead Sciences Inc Valuation – March 2018 $GILD
Pfizer Inc Valuation – February 2018 $PFE

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.

Johnson & Johnson Valuation – April 2019 #JNJ

Company Profile (excerpt from Reuters): Johnson & Johnson, incorporated on November 10, 1887, is a holding company. The Company and its subsidiaries are engaged in the research and development, manufacture and sale of a range of products in the healthcare field. The Company operates through three segments: Consumer, Pharmaceutical and Medical Devices. The Company’s primary focus is on products related to human health and well-being. The Company’s subsidiaries operated 119 manufacturing facilities, as of January 1, 2017. The Company’s research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom. The Company has over 230 operating companies, which conduct business around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JNJ – April 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 $361,737,592,452 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.47 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 20.12% Fail
6. Moderate PEmg Ratio PEmg < 20 24.36 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.20 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 1.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.87 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 $5.58
MG Growth Estimate 1.54%
MG Value $64.60
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $80.85
MG Value based on 0% Growth $47.40
Market Implied Growth Rate 7.93%
Current Price $135.83
% of Intrinsic Value 210.26%

 

Johnson & Johnson does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $5.06 in 2015 to an estimated $5.58 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.93% 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 below the price.

At the time of valuation, further research into Johnson & Johnson revealed the company was trading above its Graham Number of $65.24. The company pays a dividend of $3.54 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 24.36, which was below the industry average of 45.96, 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 $-17.3.

Johnson & Johnson receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.30
Graham Number $65.24
PEmg 24.36
Current Ratio 1.47
PB Ratio 6.20
Current Dividend $3.54
Dividend Yield 2.61%
Number of Consecutive Years of Dividend Growth 20

 

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 $46,033,000,000
Total Current Liabilities $31,230,000,000
Long-Term Debt $27,684,000,000
Total Assets $152,954,000,000
Intangible Assets $78,064,000,000
Total Liabilities $93,202,000,000
Shares Outstanding (Diluted Average) 2,726,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.49
Dec2018 $5.61
Dec2017 $0.47
Dec2016 $5.93
Dec2015 $5.48
Dec2014 $5.70
Dec2013 $4.81
Dec2012 $3.86
Dec2011 $3.49
Dec2010 $4.78
Dec2009 $4.40
Dec2008 $4.57
Dec2007 $3.63
Dec2006 $3.73
Dec2005 $3.35
Dec2004 $2.74
Dec2003 $2.29
Dec2002 $2.16
Dec2001 $1.84
Dec2000 $1.61
Dec1999 $1.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.58
Dec2018 $4.29
Dec2017 $3.91
Dec2016 $5.48
Dec2015 $5.06
Dec2014 $4.74
Dec2013 $4.26
Dec2012 $4.06
Dec2011 $4.17
Dec2010 $4.41
Dec2009 $4.13
Dec2008 $3.87
Dec2007 $3.39
Dec2006 $3.13
Dec2005 $2.72
Dec2004 $2.31
Dec2003 $2.01

Recommended Reading:

Other ModernGraham posts about the company

Johnson & Johnson Valuation – November 2018 $JNJ
Johnson & Johnson Valuation – February 2018 $JNJ
4 Best Stocks for Value Investors This Week – 1/28/17
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Johnson & Johnson Valuation – January 2017 $JNJ

Other ModernGraham posts about related companies

Bristol-Myers Squibb Co Valuation – April 2019 #BMY
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Celgene Corp Valuation – March 2019 #CELG
Amgen Inc Valuation – March 2019 #AMGN
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

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.

Bristol-Myers Squibb Co Valuation – April 2019 #BMY

Company Profile (excerpt from Reuters): Bristol-Myers Squibb Company, incorporated on August 11, 1933, is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of biopharmaceutical products. The Company’s pharmaceutical products include chemically synthesized drugs, or small molecules, and products produced from biological processes called biologics. Small molecule drugs are administered orally in the form of a pill or tablet. Biologics are administered to patients through injections or by infusion. The Company’s products include Empliciti, Opdivo, Sprycel, Yervoy, Eliquis, Orencia, Baraclude, Hepatitis C Franchise, Reyataz Franchise and Sustiva Franchise. It offers products for a range of therapeutic classes, which include virology, including human immunodeficiency virus (HIV) infection; oncology; immunoscience, and cardiovascular. Its products are sold to wholesalers, retail pharmacies, hospitals, government entities and the medical profession across the world.

Downloadable PDF version of this valuation:

ModernGraham Valuation of BMY – April 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 $76,654,092,495 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.61 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 51.08% Pass
6. Moderate PEmg Ratio PEmg < 20 17.33 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.44 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 1.61 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 $2.71
MG Growth Estimate 15.00%
MG Value $104.21
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $39.25
MG Value based on 0% Growth $23.01
Market Implied Growth Rate 4.42%
Current Price $46.91
% of Intrinsic Value 45.02%

Bristol-Myers Squibb Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 $1.24 in 2015 to an estimated $2.71 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.42% 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 Bristol-Myers Squibb Co revealed the company was trading above its Graham Number of $28.16. The company pays a dividend of $1.61 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.33, which was below the industry average of 45.96, 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 $-2.26.

Bristol-Myers Squibb Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$2.26
Graham Number $28.16
PEmg 17.33
Current Ratio 1.61
PB Ratio 5.44
Current Dividend $1.61
Dividend Yield 3.43%
Number of Consecutive Years of Dividend Growth 12

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 $17,160,000,000
Total Current Liabilities $10,654,000,000
Long-Term Debt $5,646,000,000
Total Assets $34,986,000,000
Intangible Assets $7,629,000,000
Total Liabilities $20,859,000,000
Shares Outstanding (Diluted Average) 1,637,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Dec2018 $3.01
Dec2017 $0.61
Dec2016 $2.65
Dec2015 $0.93
Dec2014 $1.20
Dec2013 $1.54
Dec2012 $1.16
Dec2011 $2.16
Dec2010 $1.79
Dec2009 $5.34
Dec2008 $2.62
Dec2007 $1.09
Dec2006 $0.81
Dec2005 $1.52
Dec2004 $1.21
Dec2003 $1.59
Dec2002 $1.06
Dec2001 $0.95
Dec2000 $1.84
Dec1999 $1.81

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.71
Dec2018 $1.90
Dec2017 $1.36
Dec2016 $1.65
Dec2015 $1.24
Dec2014 $1.45
Dec2013 $1.85
Dec2012 $2.21
Dec2011 $2.69
Dec2010 $2.74
Dec2009 $2.91
Dec2008 $1.61
Dec2007 $1.15
Dec2006 $1.20
Dec2005 $1.35
Dec2004 $1.29
Dec2003 $1.37

Recommended Reading:

Other ModernGraham posts about the company

Bristol-Myers Squibb Company Valuation – June 2018 $BMY
Bristol-Myers Squibb Co Valuation – September 2017 $BMY
Bristol-Myers Squibb Company Valuation – February 2016 $BMY
27 Companies in the Spotlight This Week – 12/20/14
Bristol-Myers Squibb Company Annual Valuation – 2014 $BMY

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Celgene Corp Valuation – March 2019 #CELG
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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

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.

Biogen Inc Valuation – March 2019 #BIIB

Company Profile (excerpt from Reuters): Biogen Inc., incorporated on April 1, 1997, is a biopharmaceutical company. The Company focuses on discovering, developing, manufacturing and delivering therapies to people living with serious neurological, rare and autoimmune diseases. The Company markets products, including TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, ZINBRYTA and FAMPYRA for multiple sclerosis (MS), FUMADERM for the treatment of severe plaque psoriasis and SPINRAZA for the treatment of spinal muscular atrophy (SMA). The Company also has a collaboration agreement with Genentech, Inc. (Genentech), a member of the Roche Group, with respect to RITUXAN for the treatment of non-Hodgkin’s lymphoma, chronic lymphocytic leukemia (CLL) and other conditions, GAZYVA indicated for the treatment of CLL and follicular lymphoma, and other anti-CD20 therapies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BIIB – 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 $46,257,034,108 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.32 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 314.38% Pass
6. Moderate PEmg Ratio PEmg < 20 11.41 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.61 Pass
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 2.32 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $20.61
MG Growth Estimate 12.91%
MG Value $707.38
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $298.87
MG Value based on 0% Growth $175.20
Market Implied Growth Rate 1.45%
Current Price $235.16
% of Intrinsic Value 33.24%

Biogen Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of dividends. As a result, all value 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 $11.08 in 2015 to an estimated $20.61 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.45% 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 Biogen Inc revealed the company was trading above its Graham Number of $202.57. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 11.41, 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 $-23.06.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$23.06
Graham Number $202.57
PEmg 11.41
Current Ratio 2.32
PB Ratio 3.61
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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 $7,640,900,000
Total Current Liabilities $3,295,200,000
Long-Term Debt $5,936,500,000
Total Assets $25,288,900,000
Intangible Assets $8,826,400,000
Total Liabilities $12,257,300,000
Shares Outstanding (Diluted Average) 200,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $27.58
Dec2018 $21.58
Dec2017 $11.92
Dec2016 $16.93
Dec2015 $15.34
Dec2014 $12.37
Dec2013 $7.81
Dec2012 $5.76
Dec2011 $5.04
Dec2010 $3.94
Dec2009 $3.35
Dec2008 $2.65
Dec2007 $1.99
Dec2006 $0.63
Dec2005 $0.47
Dec2004 $0.07
Dec2003 -$4.92
Dec2002 $0.85
Dec2001 $1.78
Dec2000 $0.72
Dec1999 $0.47

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $20.61
Dec2018 $16.63
Dec2017 $13.73
Dec2016 $13.63
Dec2015 $11.08
Dec2014 $8.29
Dec2013 $5.90
Dec2012 $4.68
Dec2011 $3.89
Dec2010 $3.04
Dec2009 $2.34
Dec2008 $1.61
Dec2007 $0.61
Dec2006 -$0.25
Dec2005 -$0.58
Dec2004 -$0.83
Dec2003 -$0.93

Recommended Reading:

Other ModernGraham posts about the company

Biogen Inc Valuation – June 2018 $BIIB
Biogen Inc Valuation – July 2017 $BIIB
Biogen Inc Valuation – February 2016 Update $BIIB
13 Best Stocks For Value Investors This Week – 10/17/15
Biogen Inc. Valuation – October 2015 Update $BIIB

Other ModernGraham posts about related companies

Mylan NV Valuation – March 2019 #MYL
Celgene Corp Valuation – March 2019 #CELG
Amgen Inc Valuation – March 2019 #AMGN
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

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.

Mylan NV Valuation – March 2019 #MYL

Company Profile (excerpt from Reuters): Mylan N.V., incorporated on July 7, 2014, is a global pharmaceutical company. The Company develops, licenses, manufactures, markets and distributes generic, brand name and over-the-counter (OTC) products in a range of dosage forms and therapeutic categories. It operates through three segments on a geographic basis, North America, Europe and Rest of World. The Company’s Cold-EEZE family of brands includes OTC cold remedies sold as lozenges, gummies, oral sprays, caplets, QuickMelts and oral liquid dose forms in the United States. The North America segment is primarily made up of its operations in the United States and Canada. The Europe segment is made up its operations in approximately 35 countries within the region. The Rest of World segment is primarily made up of its operations in India, Australia, Japan and New Zealand. Also included in the Rest of World segment are its operations in markets, which include countries in Africa (including South Africa), as well as Brazil and other countries throughout Asia and the Middle East. The Company conducts active pharmaceutical ingredient (API) business through Mylan Laboratories Limited (Mylan India). As of December 31, 2016, it offers product portfolios, including approximately 7,500 marketed products around the world, to customers in over 165 countries and territories. It operates a global vertically integrated manufacturing platform around the world and API operations. It also operates research and development (R&D) network that delivers product pipeline, including a range of dosage forms, therapeutic categories and biosimilars.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MYL – 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 $14,663,296,197 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.39 Fail
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 78.36% Pass
6. Moderate PEmg Ratio PEmg < 20 13.86 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.21 Pass
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 1.39 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 7.39 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.05
MG Growth Estimate 2.18%
MG Value $26.36
Opinion Fairly Valued
MG Grade C
MG Value based on 3% Growth $29.73
MG Value based on 0% Growth $17.43
Market Implied Growth Rate 2.68%
Current Price $28.42
% of Intrinsic Value 107.80%

Mylan NV does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.79 in 2015 to an estimated $2.05 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 2.68% 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 Mylan NV revealed the company was trading below its Graham Number of $46.77. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 13.86, 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 $-27.49.

Mylan NV receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.49
Graham Number $46.77
PEmg 13.86
Current Ratio 1.39
PB Ratio 1.21
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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 $6,367,700,000
Total Current Liabilities $4,587,800,000
Long-Term Debt $13,161,200,000
Total Assets $32,734,900,000
Intangible Assets $23,412,400,000
Total Liabilities $20,567,800,000
Shares Outstanding (Diluted Average) 516,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.12
Dec2018 $0.68
Dec2017 $1.30
Dec2016 $0.92
Dec2015 $1.70
Dec2014 $2.34
Dec2013 $1.58
Dec2012 $1.52
Dec2011 $1.22
Dec2010 $0.68
Dec2009 $0.30
Dec2008 -$1.05
Mar2007 $0.99
Mar2006 $0.79
Mar2005 $0.74
Mar2004 $1.21
Mar2003 $0.96
Mar2002 $0.91
Mar2001 $0.13
Mar2000 $0.52
Mar1999 $0.41

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.05
Dec2018 $1.14
Dec2017 $1.44
Dec2016 $1.54
Dec2015 $1.79
Dec2014 $1.71
Dec2013 $1.29
Dec2012 $0.94
Dec2011 $0.57
Dec2010 $0.28
Dec2009 $0.17
Dec2008 $0.25
Mar2007 $0.91
Mar2006 $0.89
Mar2005 $0.89
Mar2004 $0.89
Mar2003 $0.68

Recommended Reading:

Other ModernGraham posts about the company

Mylan NV Valuation – June 2018 $MYL
Mylan NV Valuation – March 2017 $MYL
Mylan NV Valuation – January 2016 Update $MYL
32 Companies in the Spotlight This Week – 12/6/14
Mylan Inc. Annual Valuation – 2014 $MYL

Other ModernGraham posts about related companies

Amgen Inc Valuation – March 2019 #AMGN
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

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.

Celgene Corp Valuation – March 2019 #CELG

Company Profile (excerpt from Reuters): Celgene Corporation, incorporated on April 17, 1986, is an integrated global biopharmaceutical company. The Company, together with its subsidiaries, is engaged in the discovery, development and commercialization of therapies for the treatment of cancer and inflammatory diseases through solutions in protein homeostasis, immuno-oncology, epigenetics, immunology and neuro-inflammation. The Company’s commercial-stage products include REVLIMID (lenalidomide), POMALYST/IMNOVID (pomalidomide), OTEZLA (apremilast), ABRAXANE (paclitaxel albumin-bound particles for injectable suspension), VIDAZA, azacitidine for injection (generic version of VIDAZA) and THALOMID (thalidomide). Its clinical trial activity includes trials across the disease areas of hematology, solid tumors, and inflammation and immunology. The Company also markets ISTODAX, which is an epigenetic modifier.

CELG Chart

CELG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CELG – 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 $61,820,626,782 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.23 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 391.91% Pass
6. Moderate PEmg Ratio PEmg < 20 14.21 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.20 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 2.23 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.95 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.19
MG Growth Estimate 15.00%
MG Value $238.39
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $89.78
MG Value based on 0% Growth $52.63
Market Implied Growth Rate 2.86%
Current Price $88.00
% of Intrinsic Value 36.91%

Celgene Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.94 in 2015 to an estimated $6.19 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.86% 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 Celgene Corporation revealed the company was trading above its Graham Number of $45.81. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 14.21, 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 $-28.36.

Celgene Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.36
Graham Number $45.81
PEmg 14.21
Current Ratio 2.23
PB Ratio 10.20
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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 $9,067,000,000
Total Current Liabilities $4,057,000,000
Long-Term Debt $19,769,000,000
Total Assets $35,480,000,000
Intangible Assets $24,216,000,000
Total Liabilities $29,319,000,000
Shares Outstanding (Diluted Average) 714,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.60
Dec2018 $5.51
Dec2017 $3.64
Dec2016 $2.49
Dec2015 $1.94
Dec2014 $2.39
Dec2013 $1.68
Dec2012 $1.65
Dec2011 $1.43
Dec2010 $0.94
Dec2009 $0.83
Dec2008 -$1.73
Dec2007 $0.27
Dec2006 $0.09
Dec2005 $0.09
Dec2004 $0.08
Dec2003 $0.04
Dec2002 -$0.15
Dec2001 $0.00
Dec2000 -$0.03
Dec1999 -$0.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.19
Dec2018 $3.72
Dec2017 $2.70
Dec2016 $2.16
Dec2015 $1.94
Dec2014 $1.83
Dec2013 $1.47
Dec2012 $1.11
Dec2011 $0.68
Dec2010 $0.23
Dec2009 -$0.11
Dec2008 -$0.47
Dec2007 $0.14
Dec2006 $0.06
Dec2005 $0.04
Dec2004 $0.00
Dec2003 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

Celgene Corp Valuation – June 2018 $CELG
Celgene Corporation Valuation – March 2017 $CELG
Celgene Corp Valuation – December 2015 Update $CELG
Celgene Corporation Analysis – September 2015 Update $CELG
Celgene Corporation Stock Analysis – May 2015 Quarterly Update

Other ModernGraham posts about related companies

Amgen Inc Valuation – March 2019 #AMGN
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

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 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.

AbbVie Inc Valuation – March 2019 #ABBV

Company Profile (excerpt from Reuters): AbbVie Inc. (AbbVie), incorporated on April 10, 2012, is a research-based biopharmaceutical company. The Company is engaged in the discovery, development, manufacture and sale of a range of pharmaceutical products. Its products are focused on treating conditions, such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson’s disease and multiple sclerosis; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis, and other serious health conditions. It offers products in various categories, including HUMIRA (adalimumab), Oncology products, Virology Products, Additional Virology products, Metabolics/Hormones products, Endocrinology products and other products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ABBV – 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 $118,154,226,149 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.98 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
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 363.28% Pass
6. Moderate PEmg Ratio PEmg < 20 15.46 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -14.24 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 0.98 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -119.05 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 $5.18
MG Growth Estimate 15.00%
MG Value $199.51
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $75.14
MG Value based on 0% Growth $44.05
Market Implied Growth Rate 3.48%
Current Price $80.10
% of Intrinsic Value 40.15%

AbbVie Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.3 in 2015 to an estimated $5.18 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.48% 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 AbbVie Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $3.59 per share, for a yield of 4.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15.46, 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 $-33.88.

AbbVie Inc receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$33.88
Graham Number $0.00
PEmg 15.46
Current Ratio 0.98
PB Ratio -14.24
Current Dividend $3.59
Dividend Yield 4.48%
Number of Consecutive Years of Dividend Growth 6

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 $16,945,000,000
Total Current Liabilities $17,239,000,000
Long-Term Debt $35,002,000,000
Total Assets $59,352,000,000
Intangible Assets $36,896,000,000
Total Liabilities $67,798,000,000
Shares Outstanding (Diluted Average) 1,501,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.56
Dec2018 $3.66
Dec2017 $3.30
Dec2016 $3.63
Dec2015 $3.13
Dec2014 $1.10
Dec2013 $2.56
Dec2012 $3.35

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.18
Dec2018 $3.32
Dec2017 $3.01
Dec2016 $2.83
Dec2015 $2.30
Dec2014 $1.72
Dec2013 $1.75
Dec2012 $1.12

Recommended Reading:

Other ModernGraham posts about the company

10 Best Dividend Paying Stocks for the Enterprising Investor – May 2018
AbbVie Inc Valuation – April 2018 $ABBV
10 Stocks for Using A Benjamin Graham Value Investing Strategy – January 2017
9 Best Stocks For Value Investors This Week – 7/23/16
AbbVie Inc Valuation – July 2016 $ABBV

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Allergan PLC Valuation – February 2019 $AGN
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Alexion Pharmaceuticals Inc Valuation – February 2019 $ALXN
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Perrigo Company Valuation – February 2019 $PRGO
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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.

Allergan PLC Valuation – February 2019 $AGN

Company Profile (excerpt from Reuters): Allergan plc, incorporated on May 16, 2013, is a specialty pharmaceutical company. The Company is engaged in the development, manufacturing, marketing and distribution of brand name pharmaceutical products, medical aesthetics, biosimilar and over-the-counter (OTC) pharmaceutical products. The Company operates through three segments: US Specialized Therapeutics, US General Medicine and International. The US Specialized Therapeutics segment includes sales relating to branded products within the United States, including Medical Aesthetics, Medical Dermatology, Eye Care, Neurosciences and Urology therapeutic products. The US General Medicine segment includes sales relating to branded products within the United States that do not fall into the US Specialized Therapeutics business units, including Central Nervous System, Gastrointestinal, Women’s Health, Anti-Infectives and Diversified Brands. The International segment includes sales relating to products sold outside the United States. Within its US Specialized Therapeutics, US General Medicine and International operations, the Company sells its brand and aesthetic pharmaceutical products primarily to drug wholesalers, retailers and distributors, including national retail drug and food store chains, hospitals, clinics, mail-order retailers, government agencies and managed healthcare providers, such as health maintenance organizations and other institutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AGN – February 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 $45,604,760,587 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.13 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
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 -392.79% Fail
6. Moderate PEmg Ratio PEmg < 20 31.61 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.71 Pass
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 1.13 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 30.67 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.34
MG Growth Estimate 15.00%
MG Value $166.99
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $62.89
MG Value based on 0% Growth $36.87
Market Implied Growth Rate 11.56%
Current Price $137.11
% of Intrinsic Value 82.11%

Allergan plc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.54 in 2015 to an estimated $4.34 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 11.56% 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 Allergan plc revealed the company was trading below its Graham Number of $262.47. The company pays a dividend of $2.88 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 31.61, which was below the industry average of 39.51, 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 $-90.04.

Allergan plc receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$90.04
Graham Number $262.47
PEmg 31.61
Current Ratio 1.13
PB Ratio 0.71
Current Dividend $2.88
Dividend Yield 2.10%
Number of Consecutive Years of Dividend Growth 2

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 $6,475,400,000
Total Current Liabilities $5,727,900,000
Long-Term Debt $22,929,400,000
Total Assets $101,787,600,000
Intangible Assets $89,608,700,000
Total Liabilities $36,656,600,000
Shares Outstanding (Diluted Average) 335,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $15.86
Dec2018 -$15.26
Dec2017 -$13.19
Dec2016 $38.18
Dec2015 $10.01
Dec2014 -$7.42
Dec2013 -$5.27
Dec2012 $0.76
Dec2011 $2.06
Dec2010 $1.48
Dec2009 $1.96
Dec2008 $2.09
Dec2007 $1.27
Dec2006 -$4.37
Dec2005 $1.22
Dec2004 $1.26
Dec2003 $1.74
Dec2002 $1.62
Dec2001 $1.07
Dec2000 $1.52
Dec1999 $1.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.34
Dec2018 -$0.13
Dec2017 $6.45
Dec2016 $13.26
Dec2015 $0.54
Dec2014 -$3.35
Dec2013 -$0.81
Dec2012 $1.50
Dec2011 $1.84
Dec2010 $1.31
Dec2009 $0.96
Dec2008 $0.41
Dec2007 -$0.21
Dec2006 -$0.54
Dec2005 $1.38
Dec2004 $1.45
Dec2003 $1.55

Recommended Reading:

Other ModernGraham posts about the company

Allergan PLC Valuation – May 2018 $AGN
Allergan plc Valuation – January 2017 $AGN
Allergan PLC Analysis – August 2015 Update $AGN
34 Companies in the Spotlight This Week – 2/7/15
Allergan Inc. Quarterly Valuation – February 2015 $AGN

Other ModernGraham posts about related companies

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
Pfizer Inc Valuation – November 2018 $PFE
Nektar Therapeutics Valuation – November 2018 $NKTR

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.

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