As an example, I will take a look at this website:
https://finance.yahoo.com/quote/TEVA/key-statistics/
There you can see a lot of statistical numbers, you can find for free at yahoo or other websites. You could also get all of those numbers from the company’s public reports and calculate them by yourself. Every company at the stock market has an obligation to report a bunch of numbers correctly in regular periods of time. I will highlight in where to look at. Green = good, yellow = questionable, red = bad.
The price of the stock at the time of writing the post was: $16.49
In this page it is not considered about what products this company sells or what happened in the past in the news etc. There are only those numbers and how to read them.
The question: Is this a buy?
Please note all this is for educational purpose
| Current | 3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | |
|---|---|---|---|---|---|---|
| Market Cap | 19.40B | 15.16B | 11.27B | 11.27B | 8.48B | 9.89B |
| Enterprise Value | 36.35B | 32.09B | 29.32B | 29.61B | 27.37B | 28.65B |
| Trailing P/E | 871.00 | — | — | — | — | — |
| Forward P/E | 9.06 | 5.93 | 4.28 | 4.16 | 3.11 | 3.63 |
| PEG Ratio (5yr expected) | — | — | 1.70 | 10.41 | 5.46 | — |
| Price/Sales | 1.20 | 1.00 | 0.76 | 0.76 | 0.56 | 0.66 |
| Price/Book | 2.67 | 2.13 | 1.69 | 1.62 | 1.07 | 1.26 |
| Enterprise Value/Revenue | 2.27 | 2.07 | 1.92 | 1.97 | 1.83 | 1.92 |
| Enterprise Value/EBITDA | 27.52 | 21.06 | 2.44k | 257.50 | 257.54 | 93.61 |
What we have to look at here is the trailing P/E ratio. As mentioned before, P/E is one of the most important numbers. As it can be seen here, the P/E is quite large, but in the past years there was no P/E at all.
Why?
There was no profit. There was a loss.
Also, you can see the market was buying the stock over the past year because of the future outlook, which was understood to be good with a prospected profitable future.
With the Trailing P/E coming back as a number, it is expected that there is a turn and the company makes a profit again.
What is meant with forward P/E is rather unknown here, because one year ago the outlook was not that rosy. I would take much care about forward P/E at a loss-making company.
Financial Highlights
Fiscal Year
| Fiscal Year Ends | 12/31/2023 |
| Most Recent Quarter (mrq) | 3/31/2024 |
These dates have no value for investment decisions.
Profitability
| Profit Margin | -2.99% |
| Operating Margin (ttm) | 17.28% |
Here it can be seen again in a clear number. Loss making, although the operating margin is positive.
Management Effectiveness
| Return on Assets (ttm) | 4.84% |
| Return on Equity (ttm) | -9.67% |
A return after making an investment here is negative. The company lived out of the substance by its assets. That means the management might not be the smartest on earth.
Income Statement
| Revenue (ttm) | 16B |
| Revenue Per Share (ttm) | 14.28 |
| Quarterly Revenue Growth (yoy) | 4.30% |
| Gross Profit (ttm) | — |
| EBITDA | 4.46B |
| Net Income Avi to Common (ttm) | -478M |
| Diluted EPS (ttm) | -0.42 |
| Quarterly Earnings Growth (yoy) | — |
The company has a good revenue and a revenue growth. That means the profit can come out of growing revenue, rather than on better products or margin. I am not sure how a loss making company can have a positive EBITDA. Maybe some tricks are played. Gross profit is not there, Net Income is negative.
Balance Sheet
| Total Cash (mrq) | 2.99B |
| Total Cash Per Share (mrq) | 2.64 |
| Total Debt (mrq) | 19.94B |
| Total Debt/Equity (mrq) | 264.33% |
| Current Ratio (mrq) | 0.89 |
| Book Value Per Share (mrq) | 6.43 |
And there we have it. The company has very much debt. Around $17B. That is more than its revenue in a year. It will take ages to pay back the debt (with interest! of course).
Cash Flow Statement
| Operating Cash Flow (ttm) | 1.39B |
| Levered Free Cash Flow (ttm) | 3.57B |
The operation itself just gives back little with this “low” cash flow.
Trading Information
Stock Price History
| Beta (5Y Monthly) | 0.91 |
| 52 Week Range | 127.28% |
| S&P 500 52-Week Change | 23.76% |
| 52 Week High | 17.69 |
| 52 Week Low | 7.40 |
| 50-Day Moving Average | 15.29 |
| 200-Day Moving Average | 12.00 |
As it was already seen in another section above the stock has been kicked down after taking so much debt and now the market decided to still buy it, probably because of the good products which have a growth in revenue. The problem now is that the price for the stock today ($16.49) is almost at the height of the 52W cycle. It is not cheap.
Share Statistics
| Avg Vol (3 month) | 9.71M |
| Avg Vol (10 day) | 8.45M |
| Shares Outstanding | 1.13B |
| Implied Shares Outstanding | 1.14B |
| Float | 1.13B |
| % Held by Insiders | 0.00% |
| % Held by Institutions | 51.92% |
| Shares Short (5/15/2024) | 12.22M |
| Short Ratio (5/15/2024) | 1.1 |
| Short % of Float (5/15/2024) | — |
| Short % of Shares Outstanding (5/15/2024) | 1.15% |
| Shares Short (prior month 4/15/2024) | 11.66M |
Here is stated that the majority of shareholders are institutions. That means they don’t easily come and go. The company has substantial products with a good value itself. The problems are elsewhere.
Dividends & Splits
| Forward Annual Dividend Rate | — |
| Forward Annual Dividend Yield | — |
| Trailing Annual Dividend Rate | 0.00 |
| Trailing Annual Dividend Yield | 0.00% |
| 5 Year Average Dividend Yield | 2.95 |
| Payout Ratio | 0.00% |
| Dividend Date | 12/12/2017 |
| Ex-Dividend Date | 11/27/2017 |
| Last Split Factor | 2:1 |
| Last Split Date | 7/1/2004 |
As there is no profit, there shouldn’t be any dividend, which is ok. If you buy this stock don’t expect to get one soon.
Conclusion
Well there are quite many red flags to consider when deciding if this is a buy or not. There are more aspects (products, market area, etc.), which can be flagged. E.g. the products are mass used from the medical sector (which can be a plus, refer to here). The hard part about investments is, find the stocks that you can actually buy by sorting out all the other buy-stocks with red flags. I will not officially recommend anything here (I am not an advisor), but as you have seen all the red flags, you might come to a conclusion by yourself. (high price etc.)
Abbreviation Guide
- mrq = Most Recent Quarter
- ttm = Trailing Twelve Months
- yoy = Year Over Year
- lfy = Last Fiscal Year
- fye = Fiscal Year Ending