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.

Mylan NV Valuation – June 2018 $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.

MYL Chart

MYL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MYL – 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 $19,912,611,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.06 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 235.45% Pass
6. Moderate PEmg Ratio PEmg < 20 14.55 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.50 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 1.06 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 33.25 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 $2.63
MG Growth Estimate 8.05%
MG Value $64.80
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $38.18
MG Value based on 0% Growth $22.38
Market Implied Growth Rate 3.02%
Current Price $38.31
% of Intrinsic Value 59.12%

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 Undervalued after growing its EPSmg (normalized earnings) from $1.71 in 2014 to an estimated $2.63 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.02% 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 Mylan NV revealed the company was trading below its Graham Number of $54.29. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 14.55, 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 $-29.5.

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) -$29.50
Graham Number $54.29
PEmg 14.55
Current Ratio 1.06
PB Ratio 1.50
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 3/1/2018
Total Current Assets $6,761,300,000
Total Current Liabilities $6,386,800,000
Long-Term Debt $12,451,400,000
Total Assets $35,184,500,000
Intangible Assets $25,365,900,000
Total Liabilities $22,007,800,000
Shares Outstanding (Diluted Average) 516,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.16
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
Mar1998 $0.36

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.63
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
Mar2002 $0.52

Recommended Reading:

Other ModernGraham posts about the company

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 – June 2018 $AMGN
Celgene Corp Valuation – June 2018 $CELG
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

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 2017 $MYL

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 Mylan NV (MYL) fares in the ModernGraham valuation model.

MYL Chart

MYL 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.

Learn More About Premium Membership

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of MYL – 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 $22,279,352,200 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.49 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 -11200.00% Fail
6. Moderate PEmg Ratio PEmg < 20 15.06 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.92 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 1.49 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 6.13 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 $2.72
MG Growth Estimate 15.00%
MG Value $104.69
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $39.43
MG Value based on 0% Growth $23.11
Market Implied Growth Rate 3.28%
Current Price $40.96
% of Intrinsic Value 39.12%

Mylan N.V. 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. 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 Undervalued after growing its EPSmg (normalized earnings) from $1.29 in 2013 to an estimated $2.72 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.28% 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 Mylan N.V. revealed the company was trading below its Graham Number of $49.05. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 15.06, 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 $-30.91.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$30.91
Graham Number $49.05
PEmg 15.06
Current Ratio 1.49
PB Ratio 1.92
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/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 $7,522,500,000
Total Current Liabilities $5,040,700,000
Long-Term Debt $15,202,900,000
Total Assets $34,726,200,000
Intangible Assets $23,679,700,000
Total Liabilities $23,610,000,000
Shares Outstanding (Diluted Average) 520,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.15
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
Mar1998 $0.36
Mar1997 $0.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.72
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
Mar2002 $0.52
Mar2001 $0.33

Recommended Reading:

Other ModernGraham posts about the company

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 2017 $AMGN
Celgene Corporation Valuation – March 2017 $CELG
Ligand Pharmaceuticals Inc Valuation – Initial Coverage $LGND
Pfizer Inc Valuation – March 2017 $PFE
Supernus Pharmaceuticals Inc Valuation – Initial Coverage $SUPN
Lannett Company Inc Valuation – Initial Coverage $LCI
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

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 – January 2016 Update $MYL

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 - November 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 Mylan NV (MYL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Mylan N.V., formerly Mylan Inc., is a global pharmaceutical company, which develops, licenses, manufactures, markets and distributes generic, branded generic and specialty pharmaceuticals. Mylan operates in two segments: Generics and Specialty. The Company’s generic pharmaceutical business is conducted primarily in the United States and Canada (collectively, North America); Europe, the Middle East, and Africa (collectively, EMEA); and India, Australia, Japan and New Zealand (collectively, Asia Pacific). Its specialty pharmaceutical business is conducted by Mylan Specialty L.P. (Mylan Specialty). The Company’s API business is conducted through Mylan Laboratories Limited (Mylan India), which is included within the Asia Pacific region in its Generics Segment. Mylan provides products to customers in approximately 140 countries and territories.

[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. Here is a free sample valuation pdf, and 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 MYL – January 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 $26,508,680,713 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.76 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 776.71% Pass
6. Moderate PEmg Ratio PEmg < 20 26.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.79 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 1.76 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.09 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

MYL value Chart January 2016

EPSmg $2.05
MG Growth Estimate 15.00%
MG Value $78.95
Opinion Undervalued
MG Value based on 3% Growth $29.73
MG Value based on 0% Growth $17.43
Market Implied Growth Rate 8.76%
Current Price $53.36
% of Intrinsic Value 67.59%

Mylan NV does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, insufficient earnings stability in the last ten years, lack of dividends, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the net current assets as well as the lack of dividends.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.57 in 2011 to an estimated $2.05 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.76% 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 Mylan NV (MYL)?  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

MYL Charts January 2016

Net Current Asset Value (NCAV) -$9.76
Graham Number $33.37
PEmg 26.02
Current Ratio 1.76
PB Ratio 2.79
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

[/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 Sep15
Total Current Assets $6,485,900,000
Total Current Liabilities $3,684,100,000
Long-Term Debt $5,845,800,000
Total Assets $21,316,500,000
Intangible Assets $12,013,500,000
Total Liabilities $11,502,900,000
Shares Outstanding (Diluted Average) 514,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.48
Dec14 $2.34
Dec13 $1.58
Dec12 $1.52
Dec11 $1.22
Dec10 $0.68
Dec09 $0.30
Dec08 -$1.05
Mar07 $0.99
Mar06 $0.79
Mar05 $0.74
Mar04 $1.21
Mar03 $0.96
Mar02 $0.91
Mar01 $0.13
Mar00 $0.52
Mar99 $0.41
Mar98 $0.36
Mar97 $0.23
Mar96 $0.38

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.05
Dec14 $1.71
Dec13 $1.29
Dec12 $0.94
Dec11 $0.57
Dec10 $0.28
Dec09 $0.17
Dec08 $0.25
Mar07 $0.91
Mar06 $0.89
Mar05 $0.89
Mar04 $0.89
Mar03 $0.68
Mar02 $0.52
Mar01 $0.33
Mar00 $0.41
Mar99 $0.33

Recommended Reading:

Other ModernGraham posts about the company

32 Companies in the Spotlight This Week – 12/6/14
Mylan Inc. Annual Valuation – 2014 $MYL

Other ModernGraham posts about related companies

Celgene Corp Valuation – December 2015 Update $CELG
Merck & Co Valuation – November 2015 Update $MRK
Zoetis Inc. Valuation – October 2015 Update $ZTS
Biogen Inc. Valuation – October 2015 Update $BIIB
Perrigo Company PLC Analysis – October 2015 Update $PRGO
Amgen Inc. Analysis – September 2015 Update $AMGN
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

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 Inc. Annual Valuation – 2014 $MYL

mylan-logoBenjamin 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 Most Undervalued Companies for the Enterprising Investor – November 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 Mylan Inc. (MYL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance):  Mylan Inc. (Mylan) is a global pharmaceutical company, which develops, licenses, manufactures, markets and distributes generic, branded generic and specialty pharmaceuticals. Mylan operates in two segments: Generics and Specialty. The Company’s generic pharmaceutical business is conducted primarily in the United States and Canada (collectively, North America); Europe, the Middle East, and Africa (collectively, EMEA); and India, Australia, Japan and New Zealand (collectively, Asia Pacific). Its specialty pharmaceutical business is conducted by Mylan Specialty L.P. (Mylan Specialty). The Company’s API business is conducted through Mylan Laboratories Limited (Mylan India), which is included within the Asia Pacific region in its Generics Segment. Mylan provides products to customers in approximately 140 countries and territories.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years - FAIL
  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 = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - FAIL
  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 - FAIL
  5. Earnings growth – EPSmg greater than 5 years ago - PASS

Valuation Summary

Key Data:

Recent Price $57.73
MG Value $80.72
MG Opinion Undervalued
Value Based on 3% Growth $30.40
Value Based on 0% Growth $17.82
Market Implied Growth Rate 9.52%
Net Current Asset Value (NCAV) -$15.02
PEmg 27.53
Current Ratio 1.30
PB Ratio 6.77

Balance Sheet – September 2014

Current Assets $5,818,000,000
Current Liabilities $4,474,000,000
Total Debt $5,724,000,000
Total Assets $15,174,000,000
Intangible Assets $6,730,000,000
Total Liabilities $11,787,000,000
Outstanding Shares 397,300,000

Earnings Per Share

2014 (estimate) $3.49
2013 $1.58
2012 $1.52
2011 $1.22
2010 $0.68
2009 $0.30
2008 -$1.05
2007 $0.99
2006 $0.79
2005 $0.74
2004 $1.21

Earnings Per Share – ModernGraham

2014 (estimate) $2.10
2013 $1.29
2012 $0.94
2011 $0.57
2010 $0.28
2009 $0.17

Dividend History

Conclusion:

Mylan Inc. is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned by the low current ratio, the lack of earnings stability over the last ten years, lack of dividend payments and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets along with the lack of dividend payments.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.28 in 2010 to only an estimated $2.10 for 2014.  This level of demonstrated growth is greater than the market’s implied estimate of 9.52% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return 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 Mylan Inc. (MYL)?  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 Mylan Inc. (MYL) 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.

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
Best Dividend Paying Stocks for Dividend Growth Investors – January 2017
Johnson & Johnson Valuation – January 2017 $JNJ

Other ModernGraham posts about related companies

Bristol-Myers Squibb Co Valuation – April 2019 #BMY
Biogen Inc Valuation – March 2019 #BIIB
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

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

Other ModernGraham posts about related companies

Biogen Inc Valuation – March 2019 #BIIB
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

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.

Pfizer Inc Valuation – November 2018 $PFE

Company Profile (excerpt from Reuters): Pfizer Inc. (Pfizer), incorporated on June 2, 1942, is a research-based global biopharmaceutical company. The Company is engaged in the discovery, development and manufacture of healthcare products. Its global portfolio includes medicines and vaccines, as well as consumer healthcare products. The Company manages its commercial operations through two business segments: Pfizer Innovative Health (IH) and Pfizer Essential Health (EH). IH focuses on developing and commercializing medicines and vaccines that improve patients’ lives, as well as products for consumer healthcare. IH therapeutic areas include internal medicine, vaccines, oncology, inflammation and immunology, rare diseases and consumer healthcare. EH includes legacy brands, branded generics, generic sterile injectable products, biosimilars and infusion systems. EH also includes a research and development (R&D) organization, as well as its contract manufacturing business. As of December 31, 2016, the Company sold its products in over 125 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PFE – November 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 $255,432,005,310 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.43 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 99.43% Pass
6. Moderate PEmg Ratio PEmg < 20 20.07 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.67 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 1.43 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.68 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 $2.19
MG Growth Estimate 1.87%
MG Value $26.82
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $31.78
MG Value based on 0% Growth $18.63
Market Implied Growth Rate 5.78%
Current Price $43.99
% of Intrinsic Value 164.03%

Pfizer 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, 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 $1.95 in 2014 to an estimated $2.19 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.78% 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 Pfizer Inc. revealed the company was trading above its Graham Number of $25. The company pays a dividend of $1.28 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.07, which was below the industry average of 36.89, 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 $-9.12.

Pfizer Inc. 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) -$9.12
Graham Number $25.00
PEmg 20.07
Current Ratio 1.43
PB Ratio 3.67
Current Dividend $1.28
Dividend Yield 2.91%
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 9/1/2018
Total Current Assets $41,583,000,000
Total Current Liabilities $29,013,000,000
Long-Term Debt $33,652,000,000
Total Assets $167,838,000,000
Intangible Assets $100,921,000,000
Total Liabilities $96,174,000,000
Shares Outstanding (Diluted Average) 5,986,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.33
Dec2017 $3.52
Dec2016 $1.17
Dec2015 $1.11
Dec2014 $1.42
Dec2013 $3.19
Dec2012 $1.94
Dec2011 $1.27
Dec2010 $1.02
Dec2009 $1.23
Dec2008 $1.20
Dec2007 $1.17
Dec2006 $2.66
Dec2005 $1.09
Dec2004 $1.49
Dec2003 $0.54
Dec2002 $1.46
Dec2001 $1.22
Dec2000 $0.59
Dec1999 $0.78
Dec1998 $0.73

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.19
Dec2017 $2.11
Dec2016 $1.52
Dec2015 $1.73
Dec2014 $1.95
Dec2013 $2.05
Dec2012 $1.43
Dec2011 $1.18
Dec2010 $1.24
Dec2009 $1.39
Dec2008 $1.49
Dec2007 $1.55
Dec2006 $1.64
Dec2005 $1.14
Dec2004 $1.13
Dec2003 $0.94
Dec2002 $1.08

Recommended Reading:

Other ModernGraham posts about the company

Pfizer Inc Valuation – February 2018 $PFE
Pfizer Inc Valuation – March 2017 $PFE
Pfizer Inc Valuation – August 2016 $PFE
Dividend Investors Should Research These 10 Stocks – July 2016
10 Companies for Enterprising Dividend Investors – June 2016

Other ModernGraham posts about related companies

Merck & Co Inc Valuation – November 2018 $MRK
Ligand Pharmaceuticals Inc Valuation – September 2018 $LGND
Supernus Pharmaceuticals Inc Valuation – August 2018 $SUPN
Lannett Co Inc Valuation – August 2018 $LCI
Spectrum Pharmaceuticals Inc Valuation – August 2018 $SPPI
Akorn Inc Valuation – July 2018 $AKRX
Mallinckrodt PLC Valuation – July 2018 $MNK
Bristol-Myers Squibb Company Valuation – June 2018 $BMY
Biogen Inc Valuation – June 2018 $BIIB
Mylan NV Valuation – June 2018 $MYL

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.

Nektar Therapeutics Valuation – November 2018 $NKTR

Company Profile (excerpt from Reuters): Nektar Therapeutics, incorporated on June 3, 1998, is a biopharmaceutical company that discovers and develops medicines in areas of high unmet medical need. The Company’s research and development pipeline of new investigational drugs includes treatments for cancer, auto-immune disease and chronic pain. It leverages its chemistry platform to discover and design new drug candidates. These drug candidates utilize its polymer conjugate technology platforms, which are designed to enable the development of new molecular entities that target known mechanisms of action. Its programs include Immuno-oncology (I-O), Immunology, Pain-NKTR-181 and Oncology-ONZEALD.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NKTR – November 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 $6,585,892,527 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 13.93 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 -194.44% Fail
6. Moderate PEmg Ratio PEmg < 20 40.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.67 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 13.93 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.18 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 $0.93
MG Growth Estimate 15.00%
MG Value $35.75
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $13.47
MG Value based on 0% Growth $7.89
Market Implied Growth Rate 16.24%
Current Price $38.05
% of Intrinsic Value 106.42%

Nektar Therapeutics 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 Fairly Valued after growing its EPSmg (normalized earnings) from $-1 in 2014 to an estimated $0.93 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 16.24% 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 Nektar Therapeutics revealed the company was trading above its Graham Number of $7.28. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 40.97, which was above the industry average of 36.89. Finally, the company was trading above its Net Current Asset Value (NCAV) of $6.06.

Nektar Therapeutics 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) $6.06
Graham Number $7.28
PEmg 40.97
Current Ratio 13.93
PB Ratio 3.67
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 9/1/2018
Total Current Assets $1,505,182,000
Total Current Liabilities $108,083,000
Long-Term Debt $246,514,000
Total Assets $2,249,098,000
Intangible Assets $76,501,000
Total Liabilities $458,976,000
Shares Outstanding (Diluted Average) 172,698,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.27
Dec2017 -$0.62
Dec2016 -$1.10
Dec2015 -$0.61
Dec2014 -$0.42
Dec2013 -$1.40
Dec2012 -$1.50
Dec2011 -$1.19
Dec2010 -$0.40
Dec2009 -$1.11
Dec2008 -$0.37
Dec2007 -$0.36
Dec2006 -$1.72
Dec2005 -$2.15
Dec2004 -$1.30
Dec2003 -$0.84
Dec2002 -$1.94
Dec2001 -$4.71
Dec2000 -$2.32
Dec1999 -$1.13
Dec1998 -$0.59

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.93
Dec2017 -$0.77
Dec2016 -$0.90
Dec2015 -$0.87
Dec2014 -$1.00
Dec2013 -$1.23
Dec2012 -$1.07
Dec2011 -$0.80
Dec2010 -$0.67
Dec2009 -$0.91
Dec2008 -$0.94
Dec2007 -$1.24
Dec2006 -$1.65
Dec2005 -$1.80
Dec2004 -$1.83
Dec2003 -$2.12
Dec2002 -$2.56

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Merck & Co Inc Valuation – November 2018 $MRK
Ligand Pharmaceuticals Inc Valuation – September 2018 $LGND
Supernus Pharmaceuticals Inc Valuation – August 2018 $SUPN
Lannett Co Inc Valuation – August 2018 $LCI
Spectrum Pharmaceuticals Inc Valuation – August 2018 $SPPI
Akorn Inc Valuation – July 2018 $AKRX
Mallinckrodt PLC Valuation – July 2018 $MNK
Bristol-Myers Squibb Company Valuation – June 2018 $BMY
Biogen Inc Valuation – June 2018 $BIIB
Mylan NV Valuation – June 2018 $MYL

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.

Back To Top