It's been a great afternoon session for Teva Pharmaceutical Industries investors, who saw their shares rise 3.1% to a price of $18.0 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
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 26.07 and an average price to book (P/B) ratio of 3.53. In contrast, Teva Pharmaceutical Industries has a trailing 12 month P/E ratio of -46.2 and a P/B ratio of 3.21.
Teva Pharmaceutical Industries's PEG ratio is 4.47, 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.
Generally Positive Cash Flows but Slimmer Gross Margins than the Industry Average of 57.86%:
| 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 | $17.94 |
| P/E Ratio | -7.34 | -12.64 | -2.87 | 26.55 | -3.86 | -35.88 |
| Free Cash Flow (M) | $1,795 | $223 | $638 | $236 | $1,042 | $1,368 |
| CAPEX (M) | $651 | $525 | $578 | $562 | $548 | n/a |
| EV / EBITDA | 113.29 | 10.11 | -6.18 | 3.41 | -9.83 | 11.7 |
| 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 generally positive cash flows, a strong EPS growth trend, 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.
