Indivior PLC (INDV, Financial) recently experienced a daily loss of -3.41% and a 3-month loss of -3.8%. Despite these figures, the Earnings Per Share (EPS) stand at 0.64. This article aims to answer a critical question: Is Indivior PLC (INDV) modestly undervalued? We delve into a comprehensive valuation analysis of the company to provide a clear picture of its intrinsic value. Read on for an insightful exploration of Indivior PLC (INDV).
Company Introduction
Indivior PLC is a specialty and generic drug manufacturing company. The company focuses on the development, manufacture, and sale of prescription drugs based on buprenorphine for the treatment of opioid dependence. Indivior PLC generates the majority of its revenue in the United States, with the rest coming from other parts of the world. The company considers merger and acquisition investment as a potential component of its operational growth strategy for expanding its research, development, manufacturing, and marketing capabilities. By comparing the stock price with the GF Value, an estimation of fair value, we can pave the way for a more profound exploration of the company's value.
Summarizing GF Value
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. The GF Value Line on our summary page gives an overview of the fair value that the stock should be traded at. It is calculated based on three factors:
- Historical multiples (PE Ratio, PS Ratio, PB Ratio and Price-to-Free-Cash-Flow) that the stock has traded at.
- GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of the business performance.
We believe the GF Value Line is the fair value that the stock should be traded at. The stock price will most likely fluctuate around the GF Value Line. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher.
The stock of Indivior PLC (INDV, Financial) is estimated to be modestly undervalued based on GuruFocus' valuation method. GF Value estimates the stock's fair value based on three key factors: historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. If the share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. On the other hand, if the share price is significantly below the GF Value calculation, the stock may be undervalued and have higher future returns. At its current price of $ 21.53 per share, Indivior PLC stock is estimated to be modestly undervalued.
Because Indivior PLC is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
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Assessing Financial Strength
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to understand its financial strength. Indivior PLC has a cash-to-debt ratio of 2.45, which ranks better than 63.71% of 1058 companies in the Drug Manufacturers industry. The overall financial strength of Indivior PLC is 5 out of 10, which indicates that the financial strength of Indivior PLC is fair.
This is the debt and cash of Indivior PLC over the past years:
Profitability and Growth
Investing in profitable companies poses less risk, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins is also typically a safer investment than one with low profit margins. Indivior PLC has been profitable 8 over the past 10 years. Over the past twelve months, the company had a revenue of $1 billion and Earnings Per Share (EPS) of $0.64. Its operating margin is -6.98%, which ranks worse than 69.17% of 1051 companies in the Drug Manufacturers industry. Overall, GuruFocus ranks the profitability of Indivior PLC at 7 out of 10, which indicates fair profitability.
Growth is probably one of the most important factors in the valuation of a company. GuruFocus' research has found that growth is closely correlated with the long-term performance of a company's stock. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Likewise, if a company's revenue and earnings are declining, the value of the company will decrease. Indivior PLC's 3-year average revenue growth rate is better than 58.55% of 924 companies in the Drug Manufacturers industry. Indivior PLC's 3-year average EBITDA growth rate is 0%, which ranks worse than 0% of 887 companies in the Drug Manufacturers industry.
ROIC vs WACC
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Indivior PLC's ROIC was -3.81, while its WACC came in at 0.64.
The historical ROIC vs WACC comparison of Indivior PLC is shown below: 
Conclusion
Overall, Indivior PLC (INDV, Financial) stock is estimated to be modestly undervalued. The company's financial condition is fair and its profitability is fair. Its growth ranks worse than 0% of 887 companies in the Drug Manufacturers industry. To learn more about Indivior PLC stock, you can check out its 30-Year Financials here.
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