On July 20, 2023, AbbVie Inc (ABBV, Financial) saw a 3.28% gain in its stock price, reaching $142.19 per share. With a market capitalization of $250.9 billion, AbbVie's financial metrics reveal a company that is robust and stable. The GF Value, a unique measure of intrinsic stock worth, currently stands at $131.71, indicating a fair valuation for AbbVie's stock.
AbbVie is a pharmaceutical powerhouse with significant exposure to immunology and oncology. Humira, its top drug, accounts for nearly half of the company's current profits. AbbVie was spun off from Abbott in early 2013, and its recent acquisition of Allergan has introduced several new drugs in aesthetics and women's health.
GF Value: A Fair Valuation for AbbVie (ABBV, Financial)
The GF Value for AbbVie (ABBV) suggests that the stock is fairly valued. The GF Value is calculated based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. If a stock's price is significantly above the GF Value Line, it may be overvalued and offer poor future returns. Conversely, if it is significantly below the GF Value Line, it may be undervalued and promise high future returns. With AbbVie's current price and market cap, the stock appears to be fairly valued.
As AbbVie is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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AbbVie's Financial Strength
It's crucial to assess the financial strength of a company before investing. Companies with poor financial strength pose a higher risk of permanent loss. AbbVie's cash-to-debt ratio is 0.11, which is lower than 84.31% of companies in the Drug Manufacturers industry. The overall financial strength of AbbVie is 4 out of 10, indicating that its financial strength is relatively weak.
Profitability and Growth of AbbVie
Investing in profitable companies carries less risk, especially if they have demonstrated consistent profitability over the long term. AbbVie has been profitable for 10 years over the past decade. During the past 12 months, the company had revenues of $56.7 billion and earnings per share of $4.23. Its operating margin of 29.73% is better than 94.68% of companies in the Drug Manufacturers industry.
Growth is an essential factor in a company's valuation. The 3-year average annual revenue growth rate of AbbVie is 13.4%, which ranks better than 72.04% of companies in the Drug Manufacturers industry. The 3-year average EBITDA growth rate is 18.2%, which ranks better than 65.65% of companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. AbbVie's ROIC was 11.87 over the past 12 months, while its WACC came in at 6.25. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders.
Conclusion
In conclusion, AbbVie (ABBV, Financial) appears to be fairly valued. The company's financial condition is weak, but its profitability is strong. Its growth ranks better than 65.65% of companies in the Drug Manufacturers industry. To learn more about AbbVie stock, you can check out its 30-Year Financials here.
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