Search Results for: 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 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?

Stage 2: Determination of Intrinsic Value

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

Useful Links:

Most Recent Balance Sheet Figures

Earnings Per Share History

Earnings Per Share – ModernGraham History

Recommended Reading:

Other ModernGraham posts about the company

Other ModernGraham posts about related companies

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.

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 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:

Balance Sheet – September 2014

Earnings Per Share

Earnings Per Share – ModernGraham

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.