Neurocrine Biosciences Inc (NBIX, Financial) has recently shown a notable daily gain of 6.02% and an impressive 3-month gain of 12.93%. With an Earnings Per Share (EPS) of $1.86, investors are keen to understand whether the stock is modestly undervalued. This article delves into a valuation analysis to uncover the intrinsic value of Neurocrine Biosciences and its potential as an investment.
Company Introduction
Neurocrine Biosciences Inc is a pharmaceutical company focused on developing treatments for central nervous system and endocrine-related disorders. With a market cap of $12.60 billion and sales of $1.80 billion, the company's stock price of $128.45 is a point of interest when compared to the GF Value of $148.49, which suggests a potential undervaluation. This valuation is critical as it sets the stage for a deeper exploration of Neurocrine Biosciences' financial health and growth prospects.
Summarize GF Value
The GF Value is a proprietary metric indicating the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. Neurocrine Biosciences (NBIX, Financial) is currently positioned as modestly undervalued according to the GF Value. This suggests that the stock's long-term return could potentially outpace its business growth, offering an attractive proposition for investors.
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Financial Strength
Understanding a company's financial strength is crucial before investing. Neurocrine Biosciences boasts a cash-to-debt ratio of 4, surpassing 68.54% of its industry peers. With a strong financial strength rating of 9 out of 10, Neurocrine Biosciences stands out as a robust investment in the Drug Manufacturers industry.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over time, is generally less risky. Neurocrine Biosciences has not only been profitable for 5 out of the past 10 years but also boasts an operating margin of 19.5%, ranking above 83.12% of its industry competitors. Furthermore, the company's growth has been impressive, with an average annual revenue growth rate of 22.3%, outperforming 85.81% of companies in the Drug Manufacturers industry. The 3-year average EBITDA growth rate of 38.6% further reinforces its strong growth profile.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is another method to gauge profitability. Neurocrine Biosciences has an ROIC of 20.78, significantly surpassing its WACC of 4.61, indicating effective capital allocation and value creation for shareholders.
Conclusion
In summary, Neurocrine Biosciences (NBIX, Financial) appears to be modestly undervalued. The company showcases a strong financial condition, fair profitability, and impressive growth, which surpasses a significant portion of its industry peers. For investors seeking a deeper understanding of Neurocrine Biosciences' financials, the 30-Year Financials provide an extensive overview.
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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.
