We've been asking ourselves recently if the market has placed a fair valuation on Bristol-Myers Squibb Company. Let's dive into some of the fundamental values of this large-cap Health Care company to determine if there might be an opportunity here for value-minded investors.
A Very Low P/E Ratio but Trades Above Its Graham Number:
Bristol-Myers Squibb Company discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 24.45 and an average price to book (P/B) ratio of 4.16. In contrast, Bristol-Myers Squibb Company has a trailing 12 month P/E ratio of 15.6 and a P/B ratio of 3.82.
Bristol-Myers Squibb Company's PEG ratio is 5.23, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Wider Gross Margins Than the Industry Average of 60.94%:
| 2018-02-13 | 2019-02-25 | 2020-02-24 | 2021-02-10 | 2022-02-09 | 2023-02-14 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $20,776 | $22,561 | $26,145 | $42,518 | $46,385 | $46,159 |
| Gross Margins | 71.0% | 71.0% | 69.0% | 72.0% | 79.0% | 78.0% |
| Operating Margins | 17% | 23% | 23% | 8% | 18% | 20% |
| Net Margins | 5.0% | 22.0% | 13.0% | -21.0% | 15.0% | 14.0% |
| Net Income (MM) | $1,007 | $4,920 | $3,439 | -$9,015 | $6,994 | $6,327 |
| Earnings Per Share | $0.61 | $3.01 | $2.01 | -$3.99 | $3.12 | $2.82 |
| EPS Growth | n/a | 393.44% | -33.22% | -298.51% | 178.2% | -9.62% |
| Diluted Shares (MM) | 1,652 | 1,637 | 1,712 | 2,258 | 2,243 | 2,245 |
| Free Cash Flow (MM) | $6,330 | $8,017 | $9,046 | $14,805 | $17,180 | $14,184 |
| Capital Expenditures (MM) | -$1,055 | -$951 | -$836 | -$753 | -$973 | -$1,118 |
| Net Current Assets (MM) | -$6,850 | -$3,699 | -$48,892 | -$50,407 | -$40,046 | -$38,429 |
| Long Term Debt (MM) | $6,975 | $5,646 | $43,387 | $48,336 | $39,605 | $35,056 |
| Net Debt / EBITDA | 0.27 | -0.27 | 4.09 | 2.54 | 1.44 | 1.55 |
Bristol-Myers Squibb Company has exceptional EPS growth and wider gross margins than its peer group. Additionally, the company's financial statements display decent operating margins with a stable trend and healthy leverage. Furthermore, Bristol-Myers Squibb Company has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and just enough current assets to cover current liabilities.
