Insmed shares fell by -1.9% during the day's morning session, and are now trading at a price of $138.35. 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.
The Market May Be Overvaluing Insmed's Earnings and Assets:
Insmed Incorporated develops and commercializes therapies for patients with serious and rare diseases in the United States, Europe, Japan, and internationally. The company offers ARIKAYCE for the treatment of refractory nontuberculous mycobacterial lung infections, as well as is in phase 3 clinical trial for the treatment of mycobacterium avium complex lung disease as part of a combination antibacterial drug regimen for adult patients. 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, Insmed has a trailing 12 month P/E ratio of -24.4 and a P/B ratio of 23.37.
Insmed has moved 93.5% over the last year compared to 15.5% for the S&P 500 — a difference of 78.0%. Insmed has a 52 week high of $149.08 and a 52 week low of $60.4.
The Business Is Unprofitable and Its Balance Sheet Is Highly Leveraged:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $136,467 | $164,413 | $188,461 | $245,358 | $305,208 | $363,707 |
| Operating Margins | -186% | -178% | -231% | -196% | -245% | -241% |
| Net Margins | -186% | -179% | -231% | -196% | -246% | -250% |
| Net Income (k) | -$254,337 | -$294,090 | -$434,654 | -$481,534 | -$749,567 | -$913,772 |
| Net Interest Expense (k) | $27,705 | $29,564 | $40,473 | $26,446 | $81,694 | $84,913 |
| Depreciation & Amort. (k) | $5,188 | $9,147 | $9,130 | $5,278 | $5,527 | $5,961 |
| Diluted Shares (k) | 84,560 | 97,605 | 112,111 | 123,035 | 140,433 | 164,043 |
| Earnings Per Share | -$3.01 | -$3.01 | -$3.88 | -$3.91 | -$5.34 | -$5.57 |
| EPS Growth | n/a | 0.0% | -28.9% | -0.77% | -36.57% | -4.31% |
| Avg. Price | $23.31 | $28.22 | $30.6 | $22.11 | $30.99 | $141.0 |
| P/E Ratio | -7.74 | -9.38 | -7.89 | -5.65 | -5.8 | -25.31 |
| Free Cash Flow (k) | -$292,917 | -$225,588 | -$370,591 | -$410,317 | -$549,535 | -$705,805 |
| CAPEX (k) | $42,268 | $6,240 | $7,289 | $9,878 | $13,288 | $21,923 |
| EV / EBITDA | -7.13 | -8.64 | -7.57 | -5.7 | -6.64 | -24.65 |
| Total Debt (k) | $450,000 | $450,000 | $800,000 | $1,154,165 | $1,177,537 | $1,121,693 |
| Current Ratio | 6.51 | 5.24 | 6.19 | 6.69 | 4.12 | 5.45 |
Insmed has declining EPS growth, negative cash flows, and High Levels of Debt. On the other hand, the company benefits from an excellent current ratio of 5.45 and rapidly growing revenues and decreasing reinvestment in the business.
