It's been a great afternoon session for Exelixis investors, who saw their shares rise 4.2% to a price of $46.15 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.
a Decline in Expected Earnings Clouds Its Value Outlook but Priced at a Premium:
Exelixis, Inc., an oncology company, focuses on the discovery, development, and commercialization of new medicines for difficult-to-treat cancers in the United States. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 22.94 and an average price to book (P/B) ratio of 3.19. In contrast, Exelixis has a trailing 12 month P/E ratio of 21.1 and a P/B ratio of 5.96.
Exelixis has moved 108.8% over the last year compared to 12.8% for the S&P 500 — a difference of 96.0%. Exelixis has a 52 week high of $49.62 and a 52 week low of $21.86.
Increasing Revenues but Narrowing Margins:
| 2017 | 2019 | 2020 | 2021 | 2022 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $854 | $968 | $988 | $1,611 | $1,830 | $2,169 |
| Operating Margins | 51% | 38% | 11% | 13% | 9% | 28% |
| Net Margins | 81% | 33% | 11% | 11% | 11% | 24% |
| Net Income (M) | $690 | $321 | $112 | $182 | $208 | $521 |
| Net Interest Expense (M) | n/a | $28 | $20 | $33 | $87 | $77 |
| Depreciation & Amort. (M) | $8 | $8 | $9 | $21 | $26 | $29 |
| Diluted Shares (M) | 313 | 309 | 322 | 325 | 321 | 296 |
| Earnings Per Share | $2.21 | $1.02 | $0.35 | $0.56 | $0.65 | $1.76 |
| EPS Growth | n/a | -53.85% | -65.69% | 60.0% | 16.07% | 170.77% |
| Avg. Price | $26.66 | $20.2 | $21.45 | $20.87 | $20.14 | $46.15 |
| P/E Ratio | 11.49 | 19.06 | 59.58 | 36.61 | 30.98 | 25.64 |
| Free Cash Flow (M) | $663 | $514 | $179 | $335 | $293 | $672 |
| CAPEX (M) | $64 | $13 | $30 | $28 | $40 | $28 |
| Current Ratio | 8.5 | 6.99 | 5.43 | 4.99 | 3.34 | 3.63 |
Exelixis has an excellent current ratio of 3.63, rapidly growing revenues and decreasing reinvestment in the business, and generally positive cash flows. However, the firm has declining EPS growth. Finally, we note that Exelixis has decent operating margins with a negative growth trend.
