Indivior PLC (INDV, Financial) experienced an 8.81% loss in its daily stock value and a 3-month loss of 2.82%. With an Earnings Per Share (EPS) (EPS) of 0.64, the question arises: Is Indivior PLC (INDV) modestly undervalued? This article aims to provide a comprehensive valuation analysis of Indivior PLC (INDV), using the unique GuruFocus Value calculation. Let's delve into the financials to answer this question.
Company Overview
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. Most of Indivior's revenue is generated in the United States, with the rest coming from other parts of the world. The company also considers merger and acquisition investments as potential strategies for expanding its research, development, manufacturing, and marketing capabilities.
Understanding the GF Value
The GF Value is a proprietary measure that reflects the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Indivior PLC (INDV, Financial) appears to be modestly undervalued based on the GuruFocus Value calculation. With a current price of $21.04 per share and a market cap of $2.70 billion, the stock shows signs of being modestly undervalued. Consequently, the long-term return of its stock is likely to be higher than its business growth.
Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, investors must 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 63.14% of 1039 companies in the Drug Manufacturers industry. The overall financial strength of Indivior PLC is 5 out of 10, indicating that the financial strength of Indivior PLC is fair.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Indivior PLC has been profitable 8 times 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 70.51% of 1031 companies in the Drug Manufacturers industry. Overall, the profitability of Indivior PLC is ranked 7 out of 10, indicating fair profitability.
Growth is probably the most important factor in the valuation of a company. The 3-year average annual revenue growth of Indivior PLC is 8.6%, which ranks better than 58.62% of 916 companies in the Drug Manufacturers industry. The 3-year average EBITDA growth rate is 0%, which ranks worse than 0% of 878 companies in the Drug Manufacturers industry.
ROIC vs WACC
Evaluating a company's profitability can also be done by comparing its return on invested capital (ROIC) to its weighted average 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 return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Indivior PLC's ROIC was -3.81 while its WACC came in at 0.65.
Conclusion
To conclude, Indivior PLC (INDV, Financial) shows signs of being modestly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks worse than 0% of 878 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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