Novo Nordisk A S (NYSE: NVO)

Sector: Healthcare Industry: Drug Manufacturers - General CIK: 0000353278
Market Cap 219.30 Bn
P/B 7.19
P/E 13.62
P/S 4.51
ROIC (Qtr) 214.28
Div Yield % 3.40
Rev 1y % (Qtr) 4.13
Total Debt (Qtr) 20.59 Bn
Debt/Equity (Qtr) 0.67

About

Novo Nordisk A/S, known in the financial markets as Novo Nordisk, is a prominent player in the global healthcare industry. The company's primary focus is on the discovery, development, manufacturing, and marketing of pharmaceutical products and services. Its roots can be traced back to 1989 when two Danish companies, Nordisk Gentofte A/S and Novo Industri A/S, merged to form the entity we know today. Novo Nordisk has a significant global presence, with operations in approximately 170 countries, and a workforce exceeding 60,000 people across 80 countries. The...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 18.73B provides robust 0.91x coverage of total debt 20.59B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 4.16B provide 2.20x coverage of short-term debt 1.89B, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 64.91B provides 3.15x coverage of total debt 20.59B, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 18.73B provides 1.69x coverage of SG&A expenses 11.05B, showing efficient operational cost management.
  • Cash reserves of 4.16B provide ample 26.36x coverage of acquisition spending 157.86M, enabling strategic growth opportunities.

Bear case

  • Operating cash flow of 18.73B barely covers its investment activities of (12.45B), with a coverage ratio of -1.50, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (12.45B) provide weak support for R&D spending of 8.18B, which is -1.52x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 18.73B provides thin coverage of dividend payments of (6.94B) with a -2.70 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 18.73B is outpaced by equity issuance of (218.24M) (-85.81 ratio), indicating concerning reliance on equity markets for funding operations.
  • Tangible assets of 64.91B provide limited backing for working capital of (6.79B), which is -9.55x, suggesting increased operational risk in market downturns.

Peer comparison

Companies in the Drug Manufacturers - General
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LLY ELI LILLY & Co 940.24 Bn 84.66 19.19 42.51 Bn
2 JNJ Johnson & Johnson 656.09 Bn 49.20 10.65 45.80 Bn
3 AMGN Amgen Inc 389.67 Bn 89.91 26.60 54.59 Bn
4 ABBV AbbVie Inc. 363.54 Bn 129.05 16.59 68.74 Bn
5 MRK Merck & Co., Inc. 320.49 Bn 202.84 7.87 41.37 Bn
6 NVS Novartis Ag 304.60 Bn 21.78 5.37 35.46 Bn
7 AZN Astrazeneca Plc 291.12 Bn 30.97 5.01 32.63 Bn
8 NVO Novo Nordisk A S 219.30 Bn 13.62 4.51 20.59 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.36 2.39
EV to Cash from Ops. EV/CFO 1.63 27.43
EV to Debt EV to Debt 1.48 6.41
EV to EBIT EV/EBIT 1.48 29.56
EV to EBITDA EV/EBITDA 1.29 21.95
EV to Free Cash Flow [EV/FCF] EV/FCF 3.28 39.77
EV to Market Cap EV to Market Cap 0.14 1.28
EV to Revenue EV/Rev 0.63 7.09
Price to Book Value [P/B] P/B 7.19 12.10
Price to Earnings [P/E] P/E 13.62 73.51
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.36 0.92
Dividend Payout Ratio % Div Payout % (Qtr) 46.40 65.92
Dividend per Basic Share Div per Share (Qtr) 1.68 2.81
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 12.68 37.42
Interest Coverage Int. cover (Qtr) 0.00 20.26
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -43.75 -9.54
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 90.57 96.72
Dividend Growth (1y) % Div 1y % (Qtr) 16.71 2.18
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 14.35 74.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 14.41 29.18
EBIT Growth (1y) % EBIT 1y % (Qtr) 15.70 66.23
EBT Growth (1y) % EBT 1y % (Qtr) 15.70 310.53
EPS Growth (1y) % EPS 1y % (Qtr) 14.68 352.41
FCF Growth (1y) % FCF 1y % (Qtr) -9.94 47.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 14.75 8.06
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.09 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.25 0.27
Cash Ratio Cash Ratio (Qtr) 0.12 2.11
Current Ratio Curr Ratio (Qtr) 0.80 6.17
Debt to Equity Ratio Debt/Equity (Qtr) 0.67 -0.40
Interest Cover Ratio Int Coverage (Qtr) 0.00 20.26
Times Interest Earned Times Interest Earned (Qtr) 0.00 20.26
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 49.30 -13.61
EBIT Margin % EBIT Margin % (Qtr) 268.63 -10.56
EBT Margin % EBT Margin % (Qtr) 42.24 -25.71
Gross Margin % Gross Margin % (Qtr) 81.00 64.91
Net Profit Margin % Net Margin % (Qtr) 33.10 -34.99