Amgen Inc (AMGN, Financial) experienced a daily gain of 1.56%, with a three-month gain of 13.96%. The company's Earnings Per Share (EPS) (EPS) stands at 14.83. The question we aim to answer: Is Amgen (AMGN) fairly valued?
Read on for a comprehensive valuation analysis of Amgen, which will provide insights into whether the stock is overvalued, undervalued, or rightly priced.
Company Overview
Amgen is a pioneer in biotechnology-based human therapeutics, with a rich history in renal disease and cancer supportive-care products. The company's flagship drugs include Epogen, Aranesp, Neupogen, Neulasta, Enbrel, and Otezla. Amgen's stock price currently stands at $265.05, with a market cap of $141.80 billion.
Understanding GF Value
The GF Value represents the intrinsic value of a stock, derived from a unique methodology. It considers historical trading multiples, GuruFocus adjustment factor based on past performance and growth, and future business performance estimates.
At its current price of $265.05 per share and the market cap of $141.80 billion, Amgen stock is believed to be fairly valued. This suggests that the long-term return of its stock is likely to be close to the rate of its business growth.
Financial Strength
Understanding the financial strength of a company is crucial before investing. Amgen has a cash-to-debt ratio of 0.56, which is worse than 58.82% of companies in the Drug Manufacturers industry. The overall financial strength of Amgen is 5 out of 10, indicating fair financial health.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Amgen has been profitable 10 over the past 10 years. Its operating margin is 35.72%, which ranks better than 97.3% of companies in the Drug Manufacturers industry.
One of the most important factors in the valuation of a company is growth. The average annual revenue growth of Amgen is 8.2%, which ranks better than 57.11% of companies in the Drug Manufacturers industry. However, the 3-year average EBITDA growth is 2.7%, which ranks worse than 62.42% 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. Over the past 12 months, Amgen's ROIC was 18.89, while its WACC came in at 7.07.
Conclusion
In conclusion, Amgen (AMGN, Financial) stock is believed to be fairly valued. The company's financial condition is fair, and its profitability is strong. Its growth ranks worse than 62.42% of companies in the Drug Manufacturers industry. To learn more about Amgen stock, you can check out its 30-Year Financials here.
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