Bristol Myers Squibb (BMY) Stock | Long Term Analysis | Overvalued or Undervalued |

Transcript (auto-generated)

All right hello and welcome everybody to other stock files fail where today we’ll be talking about bristol myers squibb turkey symbol bmy now this company is trade on the new york stock exchange and this is a stock that has been viewer requested however i do think that this company has a really interesting past and i want to talk about how this company works as a whole so i want to talk about the income of the company i want to talk about how they make their money primarily i want to talk about price earnings also intrinsic value book value all that kind of stuff so we’re going to try to give you a long-term announcement on this company and we’re also going to give a valuation analysis of this company so we’re going to talk about whether the stock is override or undervalued anyway thank you so much for watching if you like this video please do like subscribe if this is about our channel and let’s get this content to more people so that more people can understand how bristol meyer squib works and also other stocks that we talk about work as well on our channel anyway thank you so much for watching without further ado let’s get started now for bmy it is a company that was founded in 1887 that profits from its specialty drugs of which it can control the price of due to the lack of market competition that it has the company drives most of its revenue from its oncology drug sector which is about 27.7 billion dollars in revenue the second largest revenue driver for this company would be the cardiovascular drug sector that it has this company also has numerous acquisitions that it’s made over the years to grow its business and drive additional revenue and profit for its business enough to encourage warren buffett to make a sizeable investment in the business this was to the tune of approximately 2 billion us dollars owning about 33 million shares of bmy to this day he still holds a stake in bmy and this is always subject to change remember the point is that this stock offers interesting growth potential for a health business due to its successful continued profitability and it’s already strong standing in the drug business now this company currently has an intrinsic value of about 50 a share really it’s about 48.55 cents a share and this is the projected free cash flow model of calculating the district value there are many ways to calculate it so please feel free to check out another intrinsic value that you may be more interested in looking at please do comment down below though because i’m always interested in hearing about what you have to say about the valuation of this company and things like that but i want to talk about exactly how we calculate the interesting value for this model because i think this is a pretty simple model to understand here we have a growth multiple which is just essentially the projection of the growth of the earnings each year so this company has a pretty decent growth multiple about 12.4 so that is suggesting the company should be able to grow in earnings relatively steadily each year then we multiply that by the free cash flow which is just a six year average of that then we add the total stock exactly which is simply the assets mice the debt of the company multiply that by point a to just offset the growth multiple a little bit and then divide by the shares that’s staying in the market in order to get the intrinsic value per share of the company so like i said before this is just one way there are many ways of tackling nutritic value but i find this way to be pretty simple understand now here we can see that the company has a book value per share of about 16.56 a share now that is pretty decent for this company but the company does trade quite a bit higher than the book value so keep that in mind but this is very understandable because in the health sector a lot of stocks tend to trade quite a bit about their book value so i don’t see this as being a concern for this company at all and their intrinsic value is still fine with the book value not being as high however due to this lower book value this means that the company’s trading value may fluctuate more dramatically because the thing is is the intrinsic value may fluctuate more dramatically if the earnings change so since with health companies earnings can change rather dramatically because maybe some drugs may get approved some drugs may not get approved things like that so there’s a lot of factors that go into this of course that’s just a very basic example but the real point is that bmy can have a bit of a risk with the having lower book value however this is a health business this is understood to be the case already so if you’re investing in a health stock this is already something you should be aware of anyway this company currently brings in about a billion dollars a quarter which is plenty of money for the company they are able to reinvest back into their shareholders by buying back their own stock playing out dividend etcetera with this money they can also reinvest in actually making acquisitions like they’ve made of course in the past and so i think bmy is currently very stable with the fact that they are consistently able to bring in lots of money because they have a lot of legacy drugs that they’ve had for so many years because the company has just been around for many years so i think that this company will be able to at least use this profit to just consistently grow its shareholder value and also with this consistent profit the company has a forward price earnings of about eight relative to yellow finance what they say here and this is a very low forward price to earnings the lower the price earnings the more likely that the company is more undervalued because if the company’s earnings are very high and the stock trades really low that means that the company’s price earnings is going to be low so keep that in mind if you’re looking at investing the stock because the company’s price earning seems to be very low at this time so from a value investor’s perspective i am a value investor i look at this and i like to see when a company has a very low price earnings so that is something i like to talk about in our videos now this company has been willing to buy back its own stock in the past and also they said that they would be authorizing a new stock repurchase program recently so this company is still willing to buy back their own stock and so i think that this company will be able to do very well for the fact that when you buy back your own stock when a company buys back its own stock they are decreasing the outstanding shares in the market and this helps to increase the book value because the book value is the shareholder equity divided by the outstanding shares of the market and this should also help to increase the intrinsic value as well due to the fewer shares outstanding in the market this means that also the assets of the company are distributed across less shares and so your shares should be worth more when a company buys back their own stock so that is great to see if the company is willing to do this and they are also willing to pay out a dividend to the shareholders too last but not least this company does offer a dividend is at about 3.25 percent for its dividend yield at this point but of course they are willing to raise this every single year so they are about to raise their dividend likely in the future very soon and i expect this company to be able to consistently pay out this dividend every single year due to the fact that the company has consistent earnings and they should be able to benefit the shareholders more and more every year and they are constantly working to be very innovative and developing new drugs that will help to drive more income to the company so overall i trust that this company will be able to do very well in the long term due to the fact that the company has a really strong standing already in the health business and they have a good reputation i think this company will be able to consistently make more and more money as they are able to develop more drugs depending on whether or not those drugs are approved now of course this is just in my opinion i cannot predict what’s going to happen with this company however from a value perspective i see this company seems to be pretty fair valued at this point due to the lower price earnings or the lower forward priced earnings and also the company’s relatively fair intrinsic value now of course i’m not a financial advisor or anything like that so please do on research for investing anyway thank you so much for watching if you like this video please do like subscribe if it’s about our channel and please comment down below and tell us what you think about this company we’ll try to get back to you anyway thanks again for watching never get everybody.