West Pharmaceutical Services Inc (WST, Financial) has recently garnered attention from the investment community, thanks to its solid financial performance. With a current share price of $379.01, the company has experienced a slight daily dip of 0.53%, yet it boasts a significant three-month gain of 16.38%. An in-depth evaluation using the GF Score indicates that West Pharmaceutical Services Inc is on a promising path to substantial growth in the foreseeable future.
What Is the GF Score?
The GF Score is a proprietary ranking system from GuruFocus, which evaluates stocks based on five key aspects of valuation. These aspects have shown a strong correlation with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield better returns than those with lower scores. The GF Score ranges from 0 to 100, with 100 indicating the highest potential for outperformance.
- Financial strength rank: 9/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 10/10
Each component of the GF Score is positively correlated with long-term stock performance. The score is calculated by weighing these key aspects differently based on their impact on stock price performance. With high ranks in financial strength, profitability, and growth, and a slightly lower GF Value rank, West Pharmaceutical Services Inc has been assigned a GF Score of 97 out of 100, signaling a strong potential for market outperformance.
Understanding West Pharmaceutical Services Inc's Business
West Pharmaceutical Services Inc is a Pennsylvania-based company that plays a crucial role in the pharmaceutical, biotechnology, and generic drug industries. With a market cap of $28.04 billion and sales of $2.93 billion, the company boasts an operating margin of 23.85%. West Pharmaceutical Services develops, manufactures, and distributes elastomer-based products essential for injectable drug containment and administration, such as syringes, stoppers, and plungers, as well as more complex devices like auto-injectors. The company operates through two segments: proprietary products, accounting for 82% of 2021 sales, and contract-manufactured products, making up the remaining 18%. With 55% of its revenue generated from international markets and 45% from the United States, West Pharmaceutical Services Inc's global presence is substantial.
Financial Strength Breakdown
West Pharmaceutical Services Inc's Financial Strength rating reflects a solid balance sheet, indicative of a well-managed capital structure. The company's Interest Coverage ratio is an impressive 73.48, showcasing its ability to comfortably meet interest obligations. This aligns with the principles of Benjamin Graham, who valued an interest coverage ratio of at least 5. The Altman Z-Score of 22.18 further emphasizes West Pharmaceutical Services Inc's low risk of financial distress. Additionally, a Debt-to-Revenue ratio of 0.11 demonstrates the company's strategic and prudent approach to debt management.
Profitability Rank Breakdown
The Profitability Rank of West Pharmaceutical Services Inc is a testament to its efficiency in profit generation. The company's Operating Margin has seen a significant increase over the past five years, with a current figure of 25.70%. This upward trend is mirrored in the company's Gross Margin, which has consistently improved, indicating an enhanced ability to convert revenue into profit.
Growth Rank Breakdown
West Pharmaceutical Services Inc's high Growth rank reflects its dedication to business expansion. The company's 3-Year Revenue Growth Rate of 16% surpasses 69.96% of its peers in the Medical Devices & Instruments industry. The three-year EBITDA growth rate of 25.8% and a five-year rate of 23.7% highlight West Pharmaceutical Services Inc's consistent growth capabilities.
Next Steps
Considering West Pharmaceutical Services Inc's financial strength, profitability, and growth metrics, the GF Score underscores the company's exceptional position for potential outperformance. Investors seeking similar opportunities can explore more companies with strong GF Scores using the GF Score Screen provided by GuruFocus Premium.
As West Pharmaceutical Services Inc continues to navigate the dynamic healthcare landscape, its robust financials and strategic growth initiatives position it as a compelling choice for value investors. Will this trajectory propel the company to new heights in the competitive pharmaceutical supply industry?
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.
