With a recent daily loss of 3.82% and a 3-month decline of 20.38%, Bristol-Myers Squibb Co (BMY, Financial) has been navigating through turbulent market waters. Despite these fluctuations and an Earnings Per Share (EPS) of 3.94, an important question arises: is the stock significantly undervalued? This article delves into the valuation analysis of Bristol-Myers Squibb Co (BMY), providing readers with a comprehensive understanding of its financial standing and potential for future growth. Continue reading for an insightful exploration of the company's true market value.
Company Introduction
Bristol-Myers Squibb Co is a leading entity in the pharmaceutical industry, specializing in the discovery, development, and marketing of drugs for a variety of therapeutic areas, including cardiovascular diseases, cancer, and immune disorders. Immuno-oncology remains a focal point for the company, positioning it as a pioneer in drug development. With around 70% of its sales generated from the U.S. market, Bristol-Myers Squibb Co demonstrates a significant reliance on the American healthcare sector. The company's market cap stands at $99.50 billion, with sales reaching $44.90 billion. When comparing the current stock price of $48.9 to the GF Value of $71.84, a discrepancy becomes evident, suggesting that the stock may be significantly undervalued.
Summarize GF Value
The GF Value is a proprietary metric that assesses the intrinsic value of a stock, considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line serves as a benchmark for the stock's fair trading value. If a stock's price significantly deviates from the GF Value Line—either above or below—investors can anticipate corresponding implications for future returns. With Bristol-Myers Squibb Co (BMY, Financial)'s stock price at $48.9 and a market cap of $99.50 billion, the signs point towards a significant undervaluation.
As a result of this undervaluation, the long-term return of Bristol-Myers Squibb Co's stock is projected to surpass its business growth, presenting an attractive opportunity for investors.
Financial Strength
Investing in companies with robust financial strength mitigates the risk of capital loss. Key indicators such as the cash-to-debt ratio and interest coverage offer insights into a company's financial resilience. Bristol-Myers Squibb Co's cash-to-debt ratio stands at 0.2, placing it in a less favorable position than 76.62% of its peers in the Drug Manufacturers industry. However, its financial strength is deemed fair with a GuruFocus ranking of 5 out of 10.
Profitability and Growth
A profitable company, especially one with consistent performance, presents a lower investment risk. Bristol-Myers Squibb Co has maintained profitability for 9 out of the past 10 years, with an operating margin of 17.77%, surpassing 78.34% of its industry counterparts. The company's profitability is robust with a GuruFocus ranking of 8 out of 10. In terms of growth, the average annual revenue growth rate is 12.1%, ranking better than 70.04% of the industry. The 3-year average EBITDA growth rate is an impressive 27.6%, which is higher than 75.09% of the Drug Manufacturers industry.
ROIC vs WACC
The comparison between a company's Return on Invested Capital (ROIC) and its Weighted Average Cost of Capital (WACC) is a critical measure of profitability. Ideally, the ROIC should exceed the WACC, indicating efficient capital utilization. Bristol-Myers Squibb Co's ROIC is 9.33, outperforming its WACC of 5.45, which suggests that the company is generating a positive return on its investments.
Conclusion
In summary, Bristol-Myers Squibb Co (BMY, Financial) appears to be significantly undervalued. The company's financial condition is fair, and its profitability is strong, with growth outperforming a substantial portion of its industry peers. To gain a deeper understanding of Bristol-Myers Squibb Co's financials, interested parties can explore the company's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
