Novartis AG Fundamental Analysis (NYSE: NVS)
Novartis AG (NYSE: NVS) shows moderate financial fundamentals with a PE ratio of 30.70, profit margin of 17.82%, and ROE of 24.56%. The company generates $56.1B in annual revenue with strong year-over-year growth of 10.45%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 67.0/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze NVS's fundamental strength across five key dimensions:
Efficiency Score
WeakNVS struggles to generate sufficient returns from assets.
Valuation Score
ModerateNVS shows balanced valuation metrics.
Growth Score
ExcellentNVS delivers strong and consistent growth momentum.
Financial Health Score
WeakNVS carries high financial risk with limited liquidity.
Profitability Score
ExcellentNVS achieves industry-leading margins.
Key Financial Metrics
Is NVS Expensive or Cheap?
P/E Ratio
NVS trades at 30.70 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, NVS's PEG of -1.07 indicates potential undervaluation.
Price to Book
The market values Novartis AG at 8.21 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 12.16 times EBITDA. This signals the market has high growth expectations.
How Well Does NVS Make Money?
Net Profit Margin
For every $100 in sales, Novartis AG keeps $17.82 as profit after all expenses.
Operating Margin
Core operations generate 25.46 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $24.56 in profit for every $100 of shareholder equity.
ROA
Novartis AG generates $8.56 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Novartis AG generates strong operating cash flow of $17.25B, reflecting robust business health.
Free Cash Flow
Novartis AG generates strong free cash flow of $14.78B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $7.83 in free cash annually.
FCF Yield
NVS converts 4.89% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
30.70
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-1.07
vs 25 benchmark
P/B Ratio
Price to book value ratio
8.21
vs 25 benchmark
P/S Ratio
Price to sales ratio
5.41
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.30
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.88
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.25
vs 25 benchmark
ROA
Return on assets percentage
0.09
vs 25 benchmark
ROCE
Return on capital employed
0.17
vs 25 benchmark
How NVS Stacks Against Its Sector Peers
| Metric | NVS Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 30.70 | 31.03 | Neutral |
| ROE | 24.56% | 509.00% | Weak |
| Net Margin | 17.82% | 5168.00% | Weak |
| Debt/Equity | 1.30 | 0.05 | Weak (High Leverage) |
| Current Ratio | 0.88 | 5.60 | Weak Liquidity |
| ROA | 8.56% | -176.00% (disorted) | Weak |
NVS outperforms its industry in 0 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Novartis AG's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
34.45%
Industry Style: Defensive, Growth, Innovation
High GrowthEPS CAGR
113.12%
Industry Style: Defensive, Growth, Innovation
High GrowthFCF CAGR
72.54%
Industry Style: Defensive, Growth, Innovation
High Growth