PERRIGO Co plc (NYSE: PRGO)

Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic CIK: 0001585364
Market Cap 1.90 Bn
P/B 0.43
P/E -36.63
P/S 0.44
ROIC (Qtr) 1.50
Div Yield % 8.26
Rev 1y % (Qtr) -4.06
Total Debt (Qtr) 3.64 Bn
Debt/Equity (Qtr) 0.82

About

Perrigo Company plc (PRGO) is a distinguished entity in the consumer self-care industry, dedicated to the development, manufacturing, and distribution of over-the-counter (OTC) medications, nutritional supplements, and other health-related products. Perrigo's operations span a broad spectrum, encompassing the creation of infant formula, skin care products, healthy lifestyle products, and upper respiratory products, among others. The company's customer base is diverse, comprising major retailers, wholesalers, distributors, and online platforms....

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 432.10M provide 11.81x coverage of short-term debt 36.60M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 276M exceeds capital expenditure of 99.70M by 2.77x, indicating strong organic growth funding capability.
  • Cash reserves of 432.10M provide ample 45.01x coverage of acquisition spending 9.60M, enabling strategic growth opportunities.
  • Strong free cash flow of 276M provides 28.75x coverage of acquisition spending 9.60M, indicating disciplined M&A strategy.
  • Tangible assets of 4.32B provide robust 6.76x coverage of other current liabilities 639M, indicating strong asset backing.

Bear case

  • Operating cash flow of 375.70M barely covers its investment activities of (88M), with a coverage ratio of -4.27, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 375.70M provides thin coverage of dividend payments of (159M) with a -2.36 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (88M) provide weak support for R&D spending of 101.40M, which is -0.87x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating earnings of 243.60M show weak coverage of depreciation charges of 331.90M, with a 0.73 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 331.90M relative to operating cash flow of 375.70M, which is 0.88x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the Drug Manufacturers - Specialty & Generic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ZTS Zoetis Inc. 56.15 Bn 21.18 5.98 7.27 Bn
2 TAK Takeda Pharmaceutical Co Ltd 48.92 Bn 221.13 1.66 36.24 Bn
3 HLN Haleon plc 46.13 Bn 25.59 3.29 -
4 TEVA Teva Pharmaceutical Industries Ltd 35.27 Bn 49.54 2.10 17.07 Bn
5 UTHR UNITED THERAPEUTICS Corp 21.76 Bn 17.11 6.95 0.00 Bn
6 VTRS Viatris Inc 14.87 Bn -4.03 1.05 14.44 Bn
7 NBIX Neurocrine Biosciences Inc 14.08 Bn 32.91 5.25 0.43 Bn
8 ELAN Elanco Animal Health Inc 11.64 Bn 323.29 2.54 4.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.51 24.98
EV to Cash from Ops. EV/CFO 13.56 -85.40
EV to Debt EV to Debt 1.40 265.88
EV to EBIT EV/EBIT 20.92 -32.65
EV to EBITDA EV/EBITDA 8.34 -29.50
EV to Free Cash Flow [EV/FCF] EV/FCF 18.46 -32.62
EV to Market Cap EV to Market Cap 2.69 -10.98
EV to Revenue EV/Rev 1.19 -700.14
Price to Book Value [P/B] P/B 0.43 27.22
Price to Earnings [P/E] P/E -36.63 -122.96
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -0.33 0.34
Dividend Payout Ratio % Div Payout % (Qtr) -301.60 4.81
Dividend per Basic Share Div per Share (Qtr) 1.15 0.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 57.50 4.08
Interest Coverage Int. cover (Qtr) 1.50 -38.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -39.25 -157.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -70.47 44,776.25
Dividend Growth (1y) % Div 1y % (Qtr) 3.71 2.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -594.33 24.45
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 94.21 18.14
EBIT Growth (1y) % EBIT 1y % (Qtr) 898.69 37.66
EBT Growth (1y) % EBT 1y % (Qtr) 137.31 108.18
EPS Growth (1y) % EPS 1y % (Qtr) 67.24 52.88
FCF Growth (1y) % FCF 1y % (Qtr) 47.28 -54.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -4.16 25.28
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.42 0.50
Cash Payout Ratio Cash Payout (Qtr) 0.33 0.02
Cash Ratio Cash Ratio (Qtr) 0.38 2.10
Current Ratio Curr Ratio (Qtr) 2.51 3.92
Debt to Equity Ratio Debt/Equity (Qtr) 0.82 -1.11
Interest Cover Ratio Int Coverage (Qtr) 1.50 -38.10
Times Interest Earned Times Interest Earned (Qtr) 1.50 -38.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.40 -62,432.09
EBIT Margin % EBIT Margin % (Qtr) 5.69 -63,260.88
EBT Margin % EBT Margin % (Qtr) 1.90 -66,726.96
Gross Margin % Gross Margin % (Qtr) 35.50 8,332.72
Net Profit Margin % Net Margin % (Qtr) -1.20 -66,728.37