Royalty Pharma plc
Royalty Pharma plc Fundamental Analysis
Royalty Pharma plc (RPRX) shows moderate financial fundamentals with a PE ratio of 25.20, profit margin of 32.41%, and ROE of 11.89%. The company generates $2.4B in annual revenue with weak year-over-year growth of -3.86%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 42.8/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze RPRX's fundamental strength across five key dimensions:
Efficiency Score
WeakRPRX struggles to generate sufficient returns from assets.
Valuation Score
WeakRPRX trades at a premium to fair value.
Growth Score
WeakRPRX faces weak or negative growth trends.
Financial Health Score
WeakRPRX carries high financial risk with limited liquidity.
Profitability Score
ModerateRPRX maintains healthy but balanced margins.
Key Financial Metrics
Is RPRX Expensive or Cheap?
P/E Ratio
RPRX trades at 25.20 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, RPRX's PEG of 14.78 indicates potential overvaluation.
Price to Book
The market values Royalty Pharma plc at 3.00 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 7.05 times EBITDA. This is generally considered low.
How Well Does RPRX Make Money?
Net Profit Margin
For every $100 in sales, Royalty Pharma plc keeps $32.41 as profit after all expenses.
Operating Margin
Core operations generate 65.56 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $11.89 in profit for every $100 of shareholder equity.
ROA
Royalty Pharma plc generates $3.93 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Royalty Pharma plc generates strong operating cash flow of $2.49B, reflecting robust business health.
Free Cash Flow
Royalty Pharma plc generates strong free cash flow of $2.49B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $5.81 in free cash annually.
FCF Yield
RPRX converts 12.82% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
25.20
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
14.78
vs 25 benchmark
P/B Ratio
Price to book value ratio
3.00
vs 25 benchmark
P/S Ratio
Price to sales ratio
8.16
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.38
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.97
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.12
vs 25 benchmark
ROA
Return on assets percentage
0.04
vs 25 benchmark
ROCE
Return on capital employed
0.08
vs 25 benchmark
How RPRX Stacks Against Its Sector Peers
| Metric | RPRX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 25.20 | 29.28 | Better (Cheaper) |
| ROE | 11.89% | 820.00% | Weak |
| Net Margin | 32.41% | -19743.00% (disorted) | Strong |
| Debt/Equity | 1.38 | 0.26 | Weak (High Leverage) |
| Current Ratio | 0.97 | 4.69 | Weak Liquidity |
| ROA | 3.93% | -17807.00% (disorted) | Weak |
RPRX outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Royalty Pharma plc's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
-0.92%
Industry Style: Defensive, Growth, Innovation
DecliningEPS CAGR
-70.95%
Industry Style: Defensive, Growth, Innovation
DecliningFCF CAGR
31.89%
Industry Style: Defensive, Growth, Innovation
High Growth