The stock of Gilead Sciences Inc (GILD, Financial) has experienced a daily gain of 3.27%, but a 3-month loss of -1.74%. With an Earnings Per Share (EPS) of 4.35, the question arises: is Gilead Sciences fairly valued? This article provides a detailed valuation analysis of Gilead Sciences. Read on to discover the intrinsic value of this stock.
A Brief Overview of Gilead Sciences
Gilead Sciences, a company that develops and markets therapies for life-threatening infectious diseases, has a robust portfolio focused on HIV and hepatitis B and C. The company has also expanded its focus to include pulmonary and cardiovascular diseases and cancer through acquisitions. The stock price currently stands at $76.36, while its GF Value, an estimate of fair value, is $72.82. This comparison suggests that Gilead Sciences might be fairly valued. Here is the income breakdown of Gilead Sciences:
Understanding GF Value
The GF Value is a proprietary measure that indicates the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides a visual representation of the stock's fair trading value.
According to GuruFocus Value calculation, Gilead Sciences appears to be fairly valued. The stock price of $76.36 per share and the market cap of $95.10 billion suggest that Gilead Sciences is trading close to its fair value. As a result, the long-term return of its stock is likely to be close to the rate of its business growth.
Financial Strength of Gilead Sciences
Investing in companies with poor financial strength carries a higher risk of permanent capital loss. Therefore, it's crucial to assess a company's financial strength before investing. Gilead Sciences has a cash-to-debt ratio of 0.26, which is lower than 71.74% of 1051 companies in the Drug Manufacturers industry. The company's overall financial strength is ranked 5 out of 10, indicating fair financial strength.
Profitability and Growth of Gilead Sciences
Investing in companies with consistent profitability over the long term is generally less risky. Gilead Sciences has been profitable 10 out of the past 10 years, with an operating margin of 45.64%, which ranks better than 98.55% of 1035 companies in the Drug Manufacturers industry. This indicates strong profitability.
However, the growth of Gilead Sciences is not as impressive. The 3-year average annual revenue growth rate is 7.1%, which ranks better than 54.33% of 913 companies in the Drug Manufacturers industry. The 3-year average EBITDA growth rate is 5.8%, which ranks worse than 57.71% of 882 companies in the Drug Manufacturers industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) can also provide insights into its profitability. Gilead Sciences's ROIC is 17.51 while its WACC came in at 5.96, indicating that the company is creating value for its shareholders.
Conclusion
In conclusion, Gilead Sciences (GILD, Financial) appears to be fairly valued. The company's financial condition is fair, and its profitability is strong. However, its growth ranks worse than 57.71% of 882 companies in the Drug Manufacturers industry. To learn more about Gilead Sciences stock, you can check out its 30-Year Financials here.
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