With a daily gain of 2.01% and a three-month loss of 10.32%, investors might wonder about the current valuation of Bristol-Myers Squibb Co (BMY, Financial) and its Earnings Per Share (EPS) of $3.94. The key question on the minds of value investors is whether the stock is modestly undervalued. This article delves into a valuation analysis to uncover the answer and invites readers to explore the intricate details of the company's financial health and market position.
Company Introduction
Bristol-Myers Squibb Co, a leading pharmaceutical entity, is renowned for its innovative drug development in cardiovascular, cancer, and immune disorders, with a particular emphasis on immuno-oncology. With the U.S. market accounting for approximately 70% of its sales, the company's valuation is a critical aspect for investors. The current stock price of $52.29 is juxtaposed with the GF Value of $72.19, suggesting a potential undervaluation. This valuation assessment will provide a deeper insight into whether Bristol-Myers Squibb Co's stock is indeed a bargain.
Summarize GF Value
The GF Value is a proprietary metric that estimates the intrinsic value of a stock by considering historical trading multiples, an adjustment factor based on past performance, and future business performance estimates. If a stock's price significantly deviates from the GF Value Line, it may indicate overvaluation or undervaluation. Currently, Bristol-Myers Squibb Co (BMY, Financial) is considered modestly undervalued, suggesting that the stock's long-term return could surpass its business growth, providing an attractive investment opportunity.
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Financial Strength
Investing in companies with robust financial strength is crucial to avoid permanent capital loss. Bristol-Myers Squibb Co's cash-to-debt ratio of 0.2 ranks lower than many of its peers in the Drug Manufacturers industry. Despite this, its fair balance sheet has earned a financial strength rating of 5 out of 10 from GuruFocus.
Profitability and Growth
Profitability is less risky and more desirable, particularly when consistent over time. With high profit margins, Bristol-Myers Squibb Co has been profitable for 9 out of the past 10 years. The company's operating margin of 17.77% outperforms 80.04% of its industry counterparts, reflecting strong profitability. Furthermore, the company's growth prospects are promising, with an average annual revenue growth of 12.1%, which is commendable within the Drug Manufacturers industry.
ROIC vs. WACC
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) is another way to gauge a company's profitability. When ROIC exceeds WACC, it indicates value creation for shareholders. Bristol-Myers Squibb Co's ROIC of 9.33 is higher than its WACC of 4.64, suggesting efficient capital utilization and value generation.
Conclusion
In summary, Bristol-Myers Squibb Co (BMY, Financial) appears to be modestly undervalued. The company's financial condition is fair, and its profitability is robust. With growth outpacing many competitors in the Drug Manufacturers industry, the stock presents a potentially lucrative opportunity for value investors. To gain a comprehensive understanding of Bristol-Myers Squibb Co's financial trajectory, investors are encouraged to review its 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.
