Indivior PLC (INDV, Financial) has faced a notable downturn, with a significant daily loss of 9.52% and a three-month decline of 32.9%. With a Loss Per Share of $1.74, investors are naturally questioning whether the stock is significantly undervalued. This article delves into the valuation analysis of Indivior PLC (INDV), providing insights into its current market position and potential investment value.
Company Introduction
Indivior PLC (INDV, Financial) is a specialty and generic drug manufacturing company primarily known for its buprenorphine-based treatments for opioid dependence. The majority of its revenue is generated in the United States, with international markets contributing to its earnings. With a market cap of $2 billion and sales reaching $1 billion, the company's financial footprint is significant. Comparing Indivior PLC's stock price of $14.83 against the GF Value of $24.66, a discrepancy emerges, suggesting the stock may be undervalued. This valuation analysis aims to uncover the true worth of Indivior PLC's shares.
Understanding the GF Value
The GF Value is a unique metric that estimates the intrinsic value of a stock by considering historical trading multiples, adjustments based on past performance and growth, and future business performance forecasts. When a stock's price significantly deviates from the GF Value Line, it may indicate overvaluation or undervaluation, affecting the expected future returns. Indivior PLC's current share price and market capitalization suggest that it is significantly undervalued, offering a potential opportunity for investors seeking long-term growth.
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Financial Strength Analysis
Investigating a company's financial strength is crucial to avoid the risk of permanent capital loss. Indivior PLC's cash-to-debt ratio of 2.61 is commendable, ranking higher than 63.69% of its peers in the Drug Manufacturers industry. However, the overall financial strength score of 4 out of 10 indicates that Indivior PLC's financial situation could be better.
Profitability and Growth Prospects
Consistent profitability is a less risky proposition for potential investors. Indivior PLC has shown profitability in 8 of the past 10 years. Despite a revenue of $1 billion in the past twelve months, the company's Loss Per Share stands at $1.74. The operating margin is currently at -30.52%, which is lower than many competitors in the industry. Nevertheless, Indivior PLC's profitability rank of 7 out of 10 suggests it has a fair level of profitability.
Growth is a vital factor in a company's valuation. Indivior PLC's 3-year average revenue growth rate is more favorable than 58.62% of companies in the Drug Manufacturers industry. However, its 3-year average EBITDA growth rate is 0%, which is concerning and indicates a lack of growth compared to industry peers.
The Significance of ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can reveal its value creation efficiency. Indivior PLC's ROIC of -15.67 is lower than its WACC of 10.34, suggesting that the company is not generating sufficient cash flow relative to the capital invested.
Conclusion
In summary, Indivior PLC (INDV, Financial) appears to be significantly undervalued. The company's financial health is weak, and while its profitability is reasonable, its growth is not keeping pace with the industry. Investors interested in Indivior PLC should carefully consider these factors and review the company's 30-Year Financials for a more detailed analysis.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
