Teva Pharmaceutical Industries shares fell by -1.4% during the day's morning session, and are now trading at a price of $13.99. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Teva Pharmaceutical Industries's Valuation Is in Line With Its Sector Averages:
Teva Pharmaceutical Industries Limited develops, manufactures, markets, and distributes generic medicines, specialty medicines, and biopharmaceutical products in North America, Europe, Israel, and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 30.21 and an average price to book (P/B) ratio of 4.08. In contrast, Teva Pharmaceutical Industries has a trailing 12 month P/E ratio of -28.0 and a P/B ratio of 2.09.
Teva Pharmaceutical Industries's PEG ratio is 3.7, 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.
Good EPS Growth but Slimmer Gross Margins to the Industry Average of 60.94%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $18,271 | $16,887 | $16,659 | $15,878 | $14,925 | $15,846 |
| Gross Margins | 11% | 45% | 46% | 48% | 47% | 48% |
| Net Margins | -16% | -6% | -24% | 3% | -16% | -4% |
| Net Income (M) | -$2,886 | -$999 | -$3,990 | $417 | -$2,446 | -$559 |
| Net Interest Expense (M) | -$959 | -$822 | -$834 | -$1,058 | -$966 | -$1,057 |
| Depreciation & Amort. (M) | $1,842 | $1,722 | $1,557 | $1,330 | $1,308 | $1,153 |
| Diluted Shares (M) | 1,021 | 1,091 | 1,095 | 1,107 | 1,110 | 1,119 |
| Earnings Per Share | -$2.85 | -$0.91 | -$3.64 | $0.38 | -$2.2 | -$0.5 |
| EPS Growth | n/a | 68.07% | -300.0% | 110.44% | -678.95% | 77.27% |
| Avg. Price | $20.92 | $11.5 | $10.43 | $10.09 | $8.49 | $13.985 |
| P/E Ratio | -7.34 | -12.64 | -2.87 | 26.55 | -3.86 | -27.97 |
| Free Cash Flow (M) | $1,795 | $223 | $638 | n/a | $1,590 | $1,368 |
| EV / EBITDA | 113.29 | 10.11 | -6.18 | 3.41 | -9.83 | 8.91 |
| Total Debt (M) | $2,216 | $2,345 | $3,188 | $1,426 | $2,109 | $1,672 |
| Net Debt / EBITDA | 2.12 | 0.29 | -0.5 | -0.24 | 0.78 | -0.98 |
| Current Ratio | 0.96 | 0.98 | 0.99 | 1.14 | 1.05 | 1.02 |
Teva Pharmaceutical Industries has a strong EPS growth trend, positive cash flows, and healthy leverage levels. However, the firm has slimmer gross margins than its peers. Finally, we note that Teva Pharmaceutical Industries has just enough current assets to cover current liabilities, as shown by its current ratio of 1.02.
