NVS  Novartis Ag

Exchange

NYSE

Sector

Consumer Durables

Industry

Major Pharmaceuticals

Market Cap.

194.04B

Vuru Grade

66.54/100

Current Price

$82.82
+0.24 (+0.29%)

Growth Price

$51.84
Overvalued by 37.41%

Stability Price

$17.18
Overvalued by 79.25%

Company Metrics

  • P/E 30.24
  • P/S 3.93
  • P/B 2.77
  • EPS 2.74
  • Cash ROIC 10.35%
  • Cash Ratio 0.35
  • Dividend 2.72 / 3.36%
  • Avg. Vol. 1.81M
  • Shares 2.34B
  • Market Cap. 194.04B

Company Description

Novartis AG, through its subsidiaries, engages in the research, development, manufacture, and marketing of healthcare products worldwide. Its Pharmaceuticals division offers prescription medicines in various therapeutic areas, including cardiovascular and metabolism; oncology; neuroscience and ophthalmics; respiratory; integrated hospital care; and other additional products. The company's Vaccines... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Primecap Management Company Decreased Novartis Ag Adr (NYSE:NVS) Stake By $11 ...
WeeklyHub - Nov 21, 2017
Primecap Management Company decreased its stake in Novartis Ag Adr (NYSE:NVS) by 0.59% based on its latest 2017Q3 regulatory filing with the SEC.
What Next for Novartis AG (ADR) (NVS) After Forming Bullish Double Top Pattern? - BZ Weekly
As Novartis Ag (Adr) (NVS) Valuation Rose, Schafer Cullen Capital Management ...
WeeklyHub - Nov 18, 2017
Schafer Cullen Capital Management Inc increased its stake in Novartis Ag (Adr) (NVS) by 9.16% based on its latest 2017Q2 regulatory filing with the SEC.
Novartis AG (ADR) (NVS) Forms $83.22 Double Top; Bank Of Hawaii (BOH) Has 0.96 ...
HuronReport - Nov 20, 2017
Novartis AG (ADR) (NVS) formed double top with $87.38 target or 5.00% above today's $83.22 share price. Novartis AG (ADR) (NVS) has $217.34B valuation. The stock decreased 0.89% or $0.75 during the last trading session, reaching $83.22. About 4.01M ...
As Novartis Ag (Adr) (NVS) Stock Rose, Schafer Cullen Capital Management INC ...
KL Daily - Nov 18, 2017
Schafer Cullen Capital Management Inc increased its stake in Novartis Ag (Adr) (NVS) by 9.16% based on its latest 2017Q2 regulatory filing with the SEC.
Boston Family Office Has Cut By $446125 Its Novartis Ag Adr (NVS) Holding; Eii ...
Key Gazette - Nov 20, 2017
Boston Family Office Llc decreased Novartis Ag Adr (NVS) stake by 14.9% reported in 2017Q2 SEC filing. Boston Family Office Llc sold 5,375 shares as Novartis Ag Adr (NVS)'s stock rose 4.17%. The Boston Family Office Llc holds 30,707 shares with $2.56 ...
Davidson DA & Company Has Boosted By $4.57 Million Its Novartis Ag Adr (NVS ...
Wolcott Daily - Nov 20, 2017
Davidson D A & Company increased Novartis Ag Adr (NVS) stake by 12.03% reported in 2017Q2 SEC filing. Davidson D A & Company acquired 55,072 shares as Novartis Ag Adr (NVS)'s stock rose 4.17%. The Davidson D A & Company holds 512,752 ...
Ct Mason Lifted Its Novartis Ag Adr (NVS) Position; Mirati Therapeutics (MRTX ...
UtahHerald.com - Nov 11, 2017
Ct Mason increased Novartis Ag Adr (NVS) stake by 13.45% reported in 2017Q2 SEC filing. Ct Mason acquired 5,500 shares as Novartis Ag Adr (NVS)'s stock rose 4.17%. The Ct Mason holds 46,388 shares with $3.87M value, up from 40,888 last quarter.
Novartis AG (ADR) (NYSE:NVS) Contemplates the Sale of Its Sandoz Dermatology ...
Library For Smart Investors - Nov 2, 2017
Novartis AG (ADR)(NYSE:NVS) is reportedly contemplating the sale of its Sandoz dermatology generics business as part of its plan to shift focus towards higher growth areas.
Hall Laurie J Trustee Has Raised Its Stake in Novartis Ag Adr (NVS) by $4.17 ...
BZ Weekly - Nov 14, 2017
Hall Laurie J Trustee increased its stake in Novartis Ag Adr (NVS) by 0.3% based on its latest 2017Q2 regulatory filing with the SEC.
As Novartis Ag (Adr) (NVS) Valuation Rose, Schafer Cullen Capital Management ...
Finance News Daily - Nov 18, 2017
Schafer Cullen Capital Management Inc increased its stake in Novartis Ag (Adr) (NVS) by 9.16% based on its latest 2017Q2 regulatory filing with the SEC.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for NVS to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate NVS's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$82.82 Current Price

$51.84 Growth Price (DCF)

Overvalued by 37.41%


Growth Rate Assumed by Market: 18.91%


Future Free Cash Flow Growth Rate: -4.4%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$17.18 Stability Price (EPV)

Overvalued by 79.25%


Discount Rate: 15.0%

$66.24 Book Price

Overvalued by 20.02%


Satisfactory Cash Return on Invested Capital over the past 5 years

NVS has somewhat efficiently invested its financial resources in buildings, projects, and equipment. If CROIC is inconsistent, it's likely NVS could be benefiting from a one-time event or has a mixed history of investing capital productively. Read the company's Annual Report to determine whether this can improve.

NVS has created $10.35 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 11.13B 9.60B 10.49B 8.39B 8.60B
divided by
Invested Capital 92.05B 90.66B 84.55B 104.00B 100.14B
Cash ROIC 12.09% 10.59% 12.41% 8.07% 8.58%

Satisfactory Return on Equity over the past 5 years

NVS has generated adequate returns with capital that shareholders have invested. This is sufficient and implies that management performance has been good.

NVS has generated $14.60 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 9.62B 9.29B 10.28B 17.79B 6.70B
divided by
Stockholders' Equity 69.09B 74.34B 70.77B 77.05B 74.83B
Return on Equity 13.92% 12.50% 14.53% 23.10% 8.95%

Excellent Business Performance over the past 10 years

NVS has been able to maintain profitability in good times and bad. This could mean NVS has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

NVS has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 13.68B 7.35B 10.30B 12.39B 11.92B 11.13B 9.60B 10.49B 8.39B 8.60B

Good Balance Sheet

NVS's Total Assets double Total Liabilities. Its financial position is adequate. Remember to check Shareholders' Equity to see if it's stable or growing. It's one of the best measures of whether a company is creating value for shareholders.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 8.96B 3.74B 17.45B 8.13B 4.96B 8.12B 9.22B 13.86B 3.85B 7.78B
Current Assets 27.43B 20.88B 33.69B 26.69B 24.08B 28.00B 30.54B 37.56B 22.85B 24.93B
Total Assets 75.45B 78.30B 95.51B 123.32B 117.50B 124.22B 126.25B 125.39B 131.56B 130.12B
Current Liabilities 16.64B 16.50B 19.47B 24.66B 23.15B 24.05B 26.37B 26.97B 23.71B 22.21B
Total Liabilities 26.23B 28.01B 38.12B 60.12B 51.65B 55.12B 51.91B 54.62B 54.51B 55.29B
Stockholder' Equity 49.22B 50.29B 57.39B 63.20B 65.84B 69.09B 74.34B 70.77B 77.05B 74.83B
Current Ratio 1.65 1.27 1.73 1.08 1.04 1.16 1.16 1.39 0.96 1.12
TL-to-TA 0.35 0.36 0.40 0.49 0.44 0.44 0.41 0.44 0.41 0.42

Consistent Reinvestment of Profits over the past 10 years

NVS has consistently retained profits. This may put NVS in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, NVS can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 45.03B 49.83B 56.56B 62.36B 64.95B 68.18B 73.43B 69.87B 76.16B 81.15B
Retained Earnings Growth - 10.65% 13.52% 10.26% 4.15% 4.98% 7.70% -4.85% 9.00% 6.55%

Competitive Advantage over the past 10 years

NVS likely has a competitive advantage which prevents other companies from entering or competing in their industry. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at future prospects to determine its sustainability.

$20.48 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 11.95B 8.20B 8.45B 9.97B 9.25B 9.62B 9.29B 10.28B 17.79B 6.70B
divided by
Revenue 38.07B 42.58B 45.10B 51.56B 59.38B 57.56B 58.83B 53.63B 50.39B 49.44B
Net Profit Margin 31.38% 19.24% 18.74% 19.33% 15.57% 16.71% 15.79% 19.17% 35.31% 13.55%

Strong Pricing Power over the past 10 years

NVS has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$68.89 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 27.04B 31.15B 32.92B 37.07B 40.39B 38.81B 39.22B 36.29B 32.98B 31.92B
divided by
Revenue 38.07B 42.58B 45.10B 51.56B 59.38B 57.56B 58.83B 53.63B 50.39B 49.44B
Gross Margin 71.02% 73.14% 73.00% 71.90% 68.03% 67.42% 66.67% 67.66% 65.46% 64.56%

Medium Capital Intensity over the past 10 years

NVS has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

28.56% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 3.13B 2.32B 1.89B 1.68B 2.39B 3.07B 3.57B 3.40B 3.51B 2.88B
divided by
Net Income 11.95B 8.20B 8.45B 9.97B 9.25B 9.62B 9.29B 10.28B 17.79B 6.70B
Capital Expenditure Ratio 26.23% 28.26% 22.32% 16.83% 25.82% 31.90% 38.43% 33.11% 19.70% 42.98%

Very Strong Dividend History over the past 10 years

NVS has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests NVS is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 2.60B 3.35B 3.99B 4.58B 5.57B 6.12B 6.20B 6.95B 6.65B 6.48B
divided by
Shares Outstanding 2.33B 2.28B 2.27B - 2.41B 2.45B 2.48B 2.43B 2.40B 2.40B
Dividend Paid Per Share 1.12 1.46 1.76 - 2.31 2.50 2.50 2.86 2.77 2.70
Price at Year End 45.10 42.38 48.36 54.10 54.72 62.90 80.34 93.21 87.53 72.84
Dividend Yield 2.47% 3.46% 3.64% - 4.22% 3.98% 3.11% 3.07% 3.16% 3.70%

History of Stock Buybacks over the past 10 years

NVS has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 2.33B 2.28B 2.27B - 2.41B 2.45B 2.48B 2.43B 2.40B 2.40B
Stock Bought Back - 1.94% 0.72% - -100.00% -1.31% -1.37% 2.18% 0.96% 0.13%
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Discussion
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7
Posted by AlwaysAContrarian  (on March 18, 2012)
There are plenty of pharamceuticals that are suffering from expiring patents. Hence, why the whole group of them are undervalued. There’s definitely going to be some corpses. Not sure if NVS will be one of them but they do have a number of promising anti-cancer drugs in the pipeline.
2
Posted by tmuscat27  (on March 23, 2012)
Medical companies always lose patents that is why I go year by year.I look at the eps and the probabilty of achieving the said eps and I discounted ot be on the safe side and by at the safe price
ANOTHER WAY I do it is by multiplying the 10 year average diluted eps bu the signiture eps and discount it.
2
Posted by Honeybadger  (on March 23, 2012)
I personally find eps a poor metric under most circumstances. Eps is easily (and legally) manipulated. Just playing devil's advocate.
1
Posted by timholland  (on March 26, 2012)
I agree (not playing devil's advocate). A much better indicator of company profitability is Free Cash Flow. Much less easily manipulated.
1
Posted by theguy  (on March 23, 2012)
How do you figure out the probability of a company achieving a given eps?
1
Posted by rsarda1  (on March 26, 2012)
What is going to kill the pharmaceuticals is the new ObamaCare. They are going to be even more heavily regulated than now, to the point that even the pricing of the drags will be determine by the Health Care secretary. This will result in less R&D, less new experimental medications, etc... all things that requires big initial spending. It will make much harder to recoup the initial investment. And they will focus on competing for with who makes the best aspiring, Tylenol, or similar.

who cares about aspirin - let the CVS make it - aspirin has been around so long that is hard to messit up.

Say goodbye to the free market competition in the pharmaceutical field.
1
Posted by tmuscat27  (on March 21, 2012)
That 20% was a guess. I know beause I take pills manufactured by nvs and the substitute was about 20%
tm
1
Posted by dougmccormick  (on March 21, 2012)
That assumes NVS's market share only drops 20%. If there's a product sells for 20% less, they could lose significantly more market share than just 20% if you see what I mean.
1
Posted by tmuscat27  (on March 21, 2012)
does anyone have info on azn, I was reading that they like to shed a lot of employees, but I think it is a better company. Any tgoughts?
1
Posted by tmuscat27  (on March 21, 2012)
patents are coming off however nvs has a generic subsidiary, I think the company would still sell the product, so the loss in profits would be around 20%
tm
1
Posted by dougmccormick  (on March 21, 2012)
NVS will definitely still sell the products but when there's a generic drug that's the equivalent selling for 30% less... surely they're going to take a bigger hit than 20%.

Do you have any examples of companies in similar situations who only saw profits drop 20%?
0
Posted by buffettdisciple  (on March 19, 2012)
Limited upside with high risk around expiring patents. I’m steering clear until there’s a more certain future for this stock.