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- By GF Value
The stock of Bristol-Myers Squibb Company (NYSE:BMY, 30-year Financials) gives every indication of being fairly valued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $63.95 per share and the market cap of $142.8 billion, Bristol-Myers Squibb Company stock gives every indication of being fairly valued. GF Value for Bristol-Myers Squibb Company is shown in the chart below.
Because Bristol-Myers Squibb Company is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth, which averaged 14.4% over the past three years and is estimated to grow 6.73% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. Bristol-Myers Squibb Company has a cash-to-debt ratio of 0.32, which which ranks worse than 71% of the companies in Drug Manufacturers industry. The overall financial strength of Bristol-Myers Squibb Company is 4 out of 10, which indicates that the financial strength of Bristol-Myers Squibb Company is poor. This is the debt and cash of Bristol-Myers Squibb Company over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. Bristol-Myers Squibb Company has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $42.8 billion and loss of $2.78 a share. Its operating margin is 5.12%, which ranks in the middle range of the companies in Drug Manufacturers industry. Overall, the profitability of Bristol-Myers Squibb Company is ranked 7 out of 10, which indicates fair profitability. This is the revenue and net income of Bristol-Myers Squibb Company over the past years: