Investors constantly seek to determine the true value of the stocks they are interested in, and Bristol-Myers Squibb Co (BMY, Financial) is no exception. With a daily gain of 2.01% and a 3-month loss of 10.36%, the company's Earnings Per Share (EPS) of 3.94 presents a compelling case for evaluation. Is Bristol-Myers Squibb Co (BMY) modestly undervalued? This article delves into a valuation analysis to answer this question and encourages readers to explore the following comprehensive assessment.
Company Introduction
Bristol-Myers Squibb Co (BMY, Financial) is a prominent player in the pharmaceutical industry, discovering, developing, and marketing drugs for various therapeutic areas such as cardiovascular, cancer, and immune disorders. With a significant focus on immuno-oncology, Bristol-Myers Squibb Co has established itself as a leader in drug development. The company's heavy reliance on the U.S. market, which accounts for nearly 70% of its total sales, highlights its strong domestic presence compared to its peers. Considering the current stock price of $52.29 against the GF Value of $72.16, there's a potential indication that the stock is modestly undervalued, setting the stage for a deeper analysis of Bristol-Myers Squibb Co's intrinsic value.
Summarize GF Value
The GF Value is a unique measure that reflects the intrinsic value of a stock, taking into account historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. According to this measure, Bristol-Myers Squibb Co (BMY, Financial) appears modestly undervalued. The GF Value Line suggests that the stock should ideally trade at its fair value, and significant deviations from this line may indicate overvaluation or undervaluation, influencing future returns. Currently, with Bristol-Myers Squibb Co's shares priced at $52.29, the stock's long-term return is poised to potentially outpace its business growth due to its undervaluation.
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Financial Strength
Investors must scrutinize a company's financial strength to avoid the risk of permanent capital loss. Bristol-Myers Squibb Co's cash-to-debt ratio of 0.2 ranks below the majority of its industry peers, leading to a GuruFocus financial strength rating of 5 out of 10, which signifies a fair balance sheet. This important metric sheds light on the company's ability to manage its debt obligations.
Profitability and Growth
Investing in profitable companies like Bristol-Myers Squibb Co, which has maintained profitability for 9 out of the past 10 years, generally carries less risk. The company's impressive operating margin of 17.77% stands out in the Drug Manufacturers industry, and its consistent Earnings Per Share (EPS) performance further solidifies its strong profitability. Growth is a pivotal factor in valuation, and Bristol-Myers Squibb Co's revenue and EBITDA growth rates are commendable, surpassing a significant portion of its industry competitors. These growth metrics are closely correlated with long-term stock performance, underscoring the company's value creation potential.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is another way to gauge a company's profitability. Bristol-Myers Squibb Co's ROIC of 9.33 indicates that it generates cash flow effectively relative to the capital invested. With a WACC of 4.63, the company is creating value for shareholders, as its ROIC exceeds its capital costs. The historical comparison of ROIC vs WACC for Bristol-Myers Squibb Co is a testament to its efficient capital management.
Conclusion
In sum, Bristol-Myers Squibb Co (BMY, Financial) is estimated to be modestly undervalued, offering a favorable opportunity for investors. The company's financials are in fair condition, and its profitability is robust. With growth rates ranking well within its industry, Bristol-Myers Squibb Co stands out as a compelling investment. For a more detailed financial overview, investors 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.
