Icon Plc (NASDAQ: ICLR)

Sector: Healthcare Industry: Diagnostics & Research CIK: 0001060955
Market Cap 14.65 Bn
P/B 1.57
P/E 24.44
P/S 1.81
ROIC (Qtr) 0.39
Div Yield % 0.00
Rev 1y % (Qtr) 0.63
Total Debt (Qtr) 3.53 Bn
Debt/Equity (Qtr) 0.38

About

ICON PLC, often referred to as ICON plc, operates in the clinical research organization (CRO) industry, providing outsourced development and commercialization services to pharmaceutical, biotechnology, medical device, and government and public health organizations. The company's headquarters are in Dublin, Ireland, and it operates under the Irish Companies Acts. ICON's primary business activities encompass a range of clinical, consulting, and commercial services offered to clients. These include clinical trial management, consulting, contract staffing,...

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Price action

Investment thesis

Bull case

  • Robust free cash flow of 964.18M exceeds capital expenditure of 176.17M by 5.47x, indicating strong organic growth funding capability.
  • Operating cash flow of 1.14B provides strong 14.77x coverage of stock compensation 77.22M, indicating sustainable incentive practices.
  • Strong operating cash flow of 1.14B provides 1.52x coverage of SG&A expenses 751.88M, showing efficient operational cost management.
  • Robust tangible asset base of 4.20B provides 22.15x coverage of working capital 189.43M, indicating strong operational backing.
  • Cash position of 468.89M represents healthy 2.48x of working capital 189.43M, demonstrating strong operational liquidity.

Bear case

  • Operating cash flow of 1.14B barely covers its investment activities of (200.48M), with a coverage ratio of -5.69, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 468.89M provide limited coverage of acquisition spending of (1.07M), which is -439.45x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.14B provides insufficient coverage of deferred revenue obligations of 1.53B, which is 0.75x, raising concerns about future service delivery capabilities.
  • Free cash flow of 964.18M represents just -32.40x of debt issuance (29.76M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating earnings of 821M show weak coverage of depreciation charges of 388.83M, with a 2.11 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Diagnostics & Research
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TMO Thermo Fisher Scientific Inc. 234.48 Bn 35.69 5.36 35.68 Bn
2 DHR Danaher Corp /De/ 171.11 Bn 48.85 7.05 16.86 Bn
3 IDXX Idexx Laboratories Inc /De 57.62 Bn 56.08 13.83 1.09 Bn
4 IQV Iqvia Holdings Inc. 42.37 Bn 33.03 2.66 15.19 Bn
5 A Agilent Technologies, Inc. 42.16 Bn 32.36 6.07 3.35 Bn
6 NTRA Natera, Inc. 31.64 Bn -102.32 14.95 0.18 Bn
7 MTD Mettler Toledo International Inc/ 30.89 Bn 36.96 7.84 2.21 Bn
8 WAT Waters Corp /De/ 23.59 Bn 36.37 7.60 1.49 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.08 2.82
EV to Cash from Ops. EV/CFO 15.62 19.55
EV to Debt EV to Debt 5.04 54.87
EV to EBIT EV/EBIT 21.69 18.82
EV to EBITDA EV/EBITDA 14.83 4.36
EV to Free Cash Flow [EV/FCF] EV/FCF 18.47 17.63
EV to Market Cap EV to Market Cap 1.22 1.58
EV to Revenue EV/Rev 2.20 5.06
Price to Book Value [P/B] P/B 1.57 1.35
Price to Earnings [P/E] P/E 24.44 18.88
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -2.00
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.86
Dividend per Basic Share Div per Share (Qtr) 0.00 0.19
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.94
Interest Coverage Int. cover (Qtr) 4.12 -128.90
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -10.46 -35.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -32.58 23.84
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.25
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -20.44 9.72
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -25.30 -444.66
EBIT Growth (1y) % EBIT 1y % (Qtr) -23.53 8.29
EBT Growth (1y) % EBT 1y % (Qtr) -22.96 -6.03
EPS Growth (1y) % EPS 1y % (Qtr) -18.10 15.59
FCF Growth (1y) % FCF 1y % (Qtr) -21.55 56.57
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.46 185.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.49 0.57
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.15 1.23
Current Ratio Curr Ratio (Qtr) 1.06 2.70
Debt to Equity Ratio Debt/Equity (Qtr) 0.38 -0.84
Interest Cover Ratio Int Coverage (Qtr) 4.12 -128.90
Times Interest Earned Times Interest Earned (Qtr) 4.12 -128.90
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 14.90 -97.22
EBIT Margin % EBIT Margin % (Qtr) 10.13 -115.64
EBT Margin % EBT Margin % (Qtr) 7.67 -114.24
Gross Margin % Gross Margin % (Qtr) 28.10 44.76
Net Profit Margin % Net Margin % (Qtr) 7.40 -113.12