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Novartis

SWX:NOVN
Snowflake Description

Outstanding track record with mediocre balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
NOVN
SWX
CHF191B
Market Cap
  1. Home
  2. CH
  3. Pharmaceuticals & Biotech
Company description

Novartis AG researches, develops, manufactures, and markets healthcare products worldwide. The last earnings update was 27 days ago. More info.


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NOVN Share Price and Events
7 Day Returns
2.6%
SWX:NOVN
2.9%
CH Pharmaceuticals
2%
CH Market
1 Year Returns
9%
SWX:NOVN
12.4%
CH Pharmaceuticals
0.7%
CH Market
NOVN Shareholder Return
  7 Day 30 Day 90 Day 1 Year 3 Year 5 Year
Novartis (NOVN) 2.6% 8.5% -7.8% 9% 7.4% 3.2%
CH Pharmaceuticals 2.9% 3.9% -5.1% 12.4% 7% 1.4%
CH Market 2% -0.4% 1.6% 0.7% 12.7% 8.7%
1 Year Return vs Industry and Market
  • NOVN underperformed the Pharmaceuticals industry which returned 12.4% over the past year.
  • NOVN outperformed the Market in Switzerland which returned 0.7% over the past year.
Price Volatility
NOVN
Industry
5yr Volatility vs Market

Value

 Is Novartis undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Novartis to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.
Raw Data

Below are the data sources, inputs and calculation used to determine the intrinsic value for Novartis.

SWX:NOVN Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 21 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 8.4%
Perpetual Growth Rate 10-Year CH Government Bond Rate 3.3%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for SWX:NOVN
Data Point Calculation/ Source Result
Risk-Free Rate 10-Year CH Govt Bond Rate 3.3%
Equity Risk Premium S&P Global 6%
Pharmaceuticals Unlevered Beta Simply Wall St/ S&P Global 0.69
Re-levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
= 0.695 (1 + (1- 18%) (16.17%))
0.857
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm)
0.86
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 3.28% + (0.857 * 5.96%)
8.38%

Discounted Cash Flow Calculation for SWX:NOVN using 2 Stage Free Cash Flow to Equity Model

The calculations below outline how an intrinsic value for Novartis is arrived at by discounting future cash flows to their present value using the 2 stage method. We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.

SWX:NOVN DCF 1st Stage: Next 10 year cash flow forecast
Levered FCF (USD, Millions) Source Present Value
Discounted (@ 8.38%)
2019 10,386.93 Analyst x7 9,583.46
2020 11,932.57 Analyst x9 10,157.90
2021 11,519.16 Analyst x5 9,047.44
2022 11,347.86 Est @ -1.49% 8,223.45
2023 11,341.23 Est @ -0.06% 7,582.90
2024 11,448.02 Est @ 0.94% 7,062.21
2025 11,635.95 Est @ 1.64% 6,622.88
2026 11,883.99 Est @ 2.13% 6,240.83
2027 12,178.07 Est @ 2.47% 5,900.57
2028 12,508.68 Est @ 2.71% 5,591.93
Present value of next 10 years cash flows $76,013.57
SWX:NOVN DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value = FCF2028 × (1 + g) ÷ (Discount Rate – g)
= $12,508.68 × (1 + 3.28%) ÷ (8.38% – 3.28%)
$252,856.94
Present Value of Terminal Value = Terminal Value ÷ (1 + r)10
= $252,856.94 ÷ (1 + 8.38%)10
$113,038.16
SWX:NOVN Total Equity Value
Calculation Result
Total Equity Value = Present value of next 10 years cash flows + Terminal Value
= $76,013.57 + $113,038.16
$189,051.73
Equity Value per Share
(USD)
= Total value / Shares Outstanding
= $189,051.73 / 2,285.72
$82.71
SWX:NOVN Discount to Share Price
Calculation Result
Exchange Rate USD/CHF
(Reporting currency to currency of SWX:NOVN)
1.01
Value per Share
(CHF)
= Value per Share in USD x Exchange Rate (USD/CHF)
= $82.71 x 1.01
CHF83.58
Value per share (CHF) From above. CHF83.58
Current discount Discount to share price of CHF83.61
= -1 x (CHF83.61 - CHF83.58) / CHF83.58
-0%

Learn more about our DCF calculations in Simply Wall St’s analysis model .

  • The current share price of Novartis is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Novartis's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Novartis's earnings available for a low price, and how does this compare to other companies in the same industry?
Raw Data
SWX:NOVN PE (Price to Earnings) Ratio Data Sources
Data Point Source Value
Earnings Per Share * Company Filings (2019-03-31) in USD $5.40
SWX:NOVN Share Price ** SWX (2019-05-21) in CHF CHF83.61
SWX:NOVN Share Price converted to USD reporting currency Exchange rate (CHF/ USD) 0.99 $82.74
Europe Pharmaceuticals Industry PE Ratio Median Figure of 43 Publicly-Listed Pharmaceuticals Companies 21.8x
Switzerland Market PE Ratio Median Figure of 175 Publicly-Listed Companies 17.87x

* Trailing twelve months (TTM) annual GAAP earnings per share excluding extraordinary items.

** Primary Listing of Novartis.

SWX:NOVN PE (Price to Earnings) Ratio Calculation
Calculation Outcome
PE Ratio

= SWX:NOVN Share Price ÷ EPS (both in USD)

= 82.74 ÷ 5.40

15.33x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Novartis is good value based on earnings compared to the Europe Pharmaceuticals industry average.
  • Novartis is good value based on earnings compared to the Switzerland market.
Price based on expected Growth
Does Novartis's expected growth come at a high price?
Raw Data
SWX:NOVN PEG (Price to Earnings to Growth) Ratio Data Sources
Data Point Source Value
PE Ratio See PE Ratio Section 15.33x
Net Income Annual Growth Rate See Future Growth Section.
Line of Best Fit* through Consensus Estimate Earnings of 21 Analysts
5.8%per year
Europe Pharmaceuticals Industry PEG Ratio Median Figure of 35 Publicly-Listed Pharmaceuticals Companies 1.85x
Switzerland Market PEG Ratio Median Figure of 124 Publicly-Listed Companies 2.26x

*Line of best fit is calculated by linear regression .

SWX:NOVN PEG (Price to Earnings to Growth) Ratio Calculation
Calculation Outcome
PEG Ratio

= PE Ratio ÷ Net Income Annual Growth Rate

= 15.33x ÷ 5.8%

2.64x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Novartis is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Novartis's assets?
Raw Data
SWX:NOVN PB (Price to Book) Ratio Data Sources
Data Point Source Value
Book Value per Share Company Filings (2019-03-31) in USD $20.33
SWX:NOVN Share Price * SWX (2019-05-21) in CHF CHF83.61
SWX:NOVN Share Price converted to USD reporting currency Exchange rate (CHF/ USD) 0.99 $82.74
Switzerland Pharmaceuticals Industry PB Ratio Median Figure of 6 Publicly-Listed Pharmaceuticals Companies 3.47x
Switzerland Market PB Ratio Median Figure of 211 Publicly-Listed Companies 1.62x
SWX:NOVN PB (Price to Book) Ratio Calculation
Calculation Outcome
PB Ratio

= SWX:NOVN Share Price ÷ Book Value per Share (both in USD)

= 82.74 ÷ 20.33

4.07x

* Primary Listing of Novartis.

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Novartis is overvalued based on assets compared to the CH Pharmaceuticals industry average.
X
Value checks
We assess Novartis's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Pharmaceuticals industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Pharmaceuticals industry average (and greater than 0)? (1 check)
  5. Novartis has a total score of 2/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.

    Full details on the Value part of the Simply Wall St company analysis model.

Future Performance

 How is Novartis expected to perform in the next 1 to 3 years based on estimates from 21 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
5.8%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Novartis expected to grow at an attractive rate?
  • Novartis's earnings growth is expected to exceed the low risk savings rate of 3.3%.
Growth vs Market Checks
  • Novartis's earnings growth is positive but not above the Switzerland market average.
  • Novartis's revenue growth is positive but not above the Switzerland market average.
Annual Growth Rates Comparison
Raw Data
SWX:NOVN Future Growth Rates Data Sources
Data Point Source Value (per year)
SWX:NOVN Future Earnings Growth Rate Line of Best Fit* through Consensus Estimate Earnings of 21 Analysts 5.8%
SWX:NOVN Future Revenue Growth Rate Line of Best Fit* through Consensus Estimate Revenue of 21 Analysts 3.1%
Switzerland Pharmaceuticals Industry Earnings Growth Rate Market Cap Weighted Average 8.6%
Switzerland Pharmaceuticals Industry Revenue Growth Rate Market Cap Weighted Average 2.8%
Switzerland Market Earnings Growth Rate Market Cap Weighted Average 11%
Switzerland Market Revenue Growth Rate Market Cap Weighted Average 3.8%

*Line of best fit is calculated by linear regression .

Industry and Market average data is calculated daily.

Learn more about our growth rate calculations in Simply Wall St’s analysis model.

Analysts growth expectations
Raw Data
SWX:NOVN Analysts Growth Expectations Data Sources
Data Point Source Value
Past Financials Company Filings (1 month ago) See Below
Future Estimates Average of up to 21 Analyst Estimates (S&P Global) See Below
All numbers in USD Millions and using Trailing twelve months (TTM) annual period rather than quarterly.
SWX:NOVN Future Estimates Data
Date (Data in USD Millions) Revenue Cash Flow Net Income * Avg. No. Analysts
2023-12-31 52,824 16,863 11,235 8
2022-12-31 51,937 16,499 10,841 8
2021-12-31 50,465 15,239 10,286 16
2020-12-31 48,328 14,404 9,150 21
2019-12-31 46,504 13,857 8,292 21
SWX:NOVN Past Financials Data
Date (Data in USD Millions) Revenue Cash Flow Net Income *
2019-03-31 53,458 13,671 12,511
2018-12-31 53,166 14,272 12,611
2018-09-30 50,900 13,914 13,334
2018-06-30 50,471 13,450 13,792
2018-03-31 49,513 13,090 8,004
2017-12-31 50,135 12,621 7,703
2017-09-30 49,527 12,804 6,684
2017-06-30 49,176 12,449 6,543
2017-03-31 49,361 11,978 6,367
2016-12-31 49,386 11,475 6,712
2016-09-30 49,606 12,041 6,807
2016-06-30 49,750 11,936 6,672

*GAAP earnings excluding extraordinary items.

Super high growth metrics
High Growth Checks
  • Novartis's earnings are expected to grow by 5.8% yearly, however this is not considered high growth (20% yearly).
  • Novartis's revenue is expected to grow by 3.1% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Raw Data
SWX:NOVN Past and Future Earnings per Share
Data Point Source Value
Past Financials Company Filings (1 month ago) See Below
Future Estimates Average of up to 21 Analyst Estimates (S&P Global) See Below

All data from Novartis Company Filings, last reported 1 month ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

SWX:NOVN Future Estimates Data
Date (Data in USD Millions) EPS * EPS High Estimate EPS Low Estimate Avg. No. Analysts
2023-12-31 5.02 5.38 4.59 3.00
2022-12-31 4.84 5.18 4.42 3.00
2021-12-31 4.53 4.98 4.23 9.00
2020-12-31 4.01 4.50 3.28 12.00
2019-12-31 3.59 3.77 3.41 9.00
SWX:NOVN Past Financials Data
Date (Data in USD Millions) EPS *
2019-03-31 5.40
2018-12-31 5.44
2018-09-30 5.74
2018-06-30 5.92
2018-03-31 3.43
2017-12-31 3.28
2017-09-30 2.83
2017-06-30 2.76
2017-03-31 2.68
2016-12-31 2.82
2016-09-30 2.86
2016-06-30 2.80

*GAAP earnings excluding extraordinary items.

Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Novartis is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
X
Future performance checks
We assess Novartis's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the Switzerland market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the Switzerland market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Novartis has a total score of 1/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Novartis performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Novartis's growth in the last year to its industry (Pharmaceuticals).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Novartis's year on year earnings growth rate has been positive over the past 5 years.
  • Novartis's 1-year earnings growth exceeds its 5-year average (56.3% vs 4.5%)
  • Novartis's earnings growth has exceeded the Europe Pharmaceuticals industry average in the past year (56.3% vs 12%).
Earnings and Revenue History
Novartis's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Raw Data

All data from Novartis Company Filings, last reported 1 month ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

SWX:NOVN Past Revenue, Cash Flow and Net Income Data
Date (Data in USD Millions) Revenue Net Income * G+A Expenses R&D Expenses
2019-03-31 53,458.00 12,511.00 16,465.00 8,865.00
2018-12-31 53,166.00 12,611.00 16,429.00 8,871.00
2018-09-30 50,900.00 13,334.00 15,454.00 8,433.00
2018-06-30 50,471.00 13,792.00 15,196.00 8,457.00
2018-03-31 49,513.00 8,004.00 14,812.00 8,323.00
2017-12-31 50,135.00 7,703.00 15,000.00 8,510.00
2017-09-30 49,527.00 6,684.00 14,713.00 8,460.00
2017-06-30 49,176.00 6,543.00 14,435.00 8,445.00
2017-03-31 49,361.00 6,367.00 14,278.00 8,573.00
2016-12-31 49,386.00 6,712.00 14,111.00 8,445.00
2016-09-30 49,606.00 6,807.00 14,110.00 8,773.00
2016-06-30 49,750.00 6,672.00 14,173.00 8,739.00
2016-03-31 49,967.00 6,722.00 14,141.00 8,755.00
2015-12-31 50,387.00 7,017.00 14,247.00 8,935.00
2015-09-30 50,635.00 8,417.00 14,241.00 8,685.00
2015-06-30 51,450.00 9,697.00 14,343.00 8,656.00
2015-03-31 52,503.00 10,536.00 14,552.00 8,628.00
2014-12-31 53,634.00 10,657.00 14,993.00 9,086.00
2014-09-30 53,908.00 10,191.00 15,122.00 8,910.00
2014-06-30 53,514.00 9,233.00 15,231.00 8,965.00
2014-03-31 52,845.00 9,095.00 15,189.00 9,034.00
2013-12-31 52,716.00 9,192.00 15,189.00 8,946.00
2013-09-30 54,100.00 9,191.00 15,720.00 9,077.00
2013-06-30 55,233.00 9,454.00 16,132.00 9,052.00
2013-03-31 56,494.00 9,547.00 16,698.00 9,090.00
2012-12-31 51,971.00 9,417.00 15,102.00 8,465.00
2012-09-30 57,489.00 8,460.00 17,451.00 8,983.00
2012-06-30 58,484.00 8,534.00 17,751.00 9,267.00

*GAAP earnings excluding extraordinary items.

Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Novartis has efficiently used shareholders’ funds last year (Return on Equity greater than 20%).
  • Novartis used its assets more efficiently than the Europe Pharmaceuticals industry average last year based on Return on Assets.
  • Novartis has significantly improved its use of capital last year versus 3 years ago (Return on Capital Employed).
X
Past performance checks
We assess Novartis's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Pharmaceuticals industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Novartis has a total score of 6/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Novartis's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Novartis's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Novartis's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
  • Novartis's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Novartis's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Debt is covered by short term assets, assets are 1.7x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
Raw Data

All data from Novartis Company Filings, last reported 1 month ago.

SWX:NOVN Past Debt and Equity Data
Date (Data in USD Millions) Total Equity Total Debt Cash & Short Term Investments
2019-03-31 47,307.00 30,590.00 7,046.00
2018-12-31 78,692.00 32,148.00 15,834.00
2018-09-30 78,019.00 31,782.00 14,541.00
2018-06-30 76,901.00 32,356.00 12,960.00
2018-03-31 71,211.00 34,110.00 6,393.00
2017-12-31 74,227.00 28,532.00 9,454.00
2017-09-30 72,370.00 30,160.00 9,399.00
2017-06-30 69,978.00 30,561.00 8,421.00
2017-03-31 67,646.00 31,257.00 8,237.00
2016-12-31 74,891.00 23,802.00 7,547.00
2016-09-30 75,066.00 26,566.00 7,739.00
2016-06-30 72,532.00 26,368.00 5,648.00
2016-03-31 71,889.00 28,094.00 5,070.00
2015-12-31 77,122.00 21,931.00 5,304.00
2015-09-30 76,785.00 22,701.00 5,932.00
2015-06-30 78,832.00 23,274.00 5,810.00
2015-03-31 76,444.00 25,113.00 7,363.00
2014-12-31 70,844.00 20,411.00 13,506.00
2014-09-30 71,424.00 19,607.00 10,427.00
2014-06-30 70,517.00 20,430.00 7,317.00
2014-03-31 70,336.00 21,211.00 7,721.00
2013-12-31 74,472.00 18,018.00 9,101.00
2013-09-30 72,179.00 18,775.00 7,270.00
2013-06-30 69,628.00 18,871.00 5,091.00
2013-03-31 67,148.00 20,944.00 6,035.00
2012-12-31 69,263.00 19,726.00 7,979.00
2012-09-30 67,205.00 20,840.00 5,801.00
2012-06-30 64,241.00 22,632.00 6,106.00
  • Novartis's level of debt (64.7%) compared to net worth is high (greater than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (30.1% vs 64.7% today).
  • Debt is well covered by operating cash flow (44.7%, greater than 20% of total debt).
  • Interest payments on debt are well covered by earnings (EBIT is 16.4x coverage).
X
Financial health checks
We assess Novartis's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by operating cash flow? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Novartis has a total score of 3/6, see the detailed checks below.
For companies that are loss making and have been so on average in the past we replace the last 2 checks with:
  1. Does cash and short term investments cover stable operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)
  2. Does cash and short term investments cover growing operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Novartis's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
3.37%
Current annual income from Novartis dividends. Estimated to be 3.68% next year.
If you bought CHF2,000 of Novartis shares you are expected to receive CHF67 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Novartis's pays a higher dividend yield than the bottom 25% of dividend payers in Switzerland (1.98%).
  • Novartis's dividend is below the markets top 25% of dividend payers in Switzerland (3.77%).
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
Raw Data
SWX:NOVN Annualized Past and Future Dividends
Data Point Source Value
Past Annualized Dividend Yield S&P Global Market Data See Below
Past Dividends per Share Company Filings/ Annualized Dividend Payments See Below
Future Dividends per Share Estimates Average of up to 21 Analyst Estimates (S&P Global) See Below
Europe Pharmaceuticals Industry Average Dividend Yield Market Cap Weighted Average of 32 Stocks 3.4%
Switzerland Market Average Dividend Yield Market Cap Weighted Average of 166 Stocks 3.1%
Switzerland Minimum Threshold Dividend Yield 10th Percentile 1.3%
Switzerland Bottom 25% Dividend Yield 25th Percentile 2%
Switzerland Top 25% Dividend Yield 75th Percentile 3.8%

Industry and Market average data is calculated daily.

Note all dividend per share amounts are annualized and not quarterly or other period.

SWX:NOVN Future Dividends Estimate Data
Date (Data in $) Dividend per Share (annual) Avg. No. Analysts
2023-12-31 3.39 3.00
2022-12-31 3.29 3.00
2021-12-31 3.13 16.00
2020-12-31 3.03 19.00
2019-12-31 2.92 20.00
SWX:NOVN Past Annualized Dividends Data
Date (Data in $) Dividend per share (annual) Avg. Yield (%)
2019-02-28 2.788 3.275
2019-01-30 2.890 3.237
2018-03-02 2.777 3.455
2017-01-25 2.709 3.445
2017-01-24 2.749 3.907
2016-02-23 2.617 3.610
2015-02-27 2.523 2.863
2014-02-25 2.405 2.945
2013-02-22 2.349 3.326
2012-02-23 2.263 4.088
2011-02-22 2.300 4.366
2010-01-26 1.808 3.822

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Whilst dividend payments have been stable, Novartis has been paying a dividend for less than 10 years.
  • Dividend payments have increased, but Novartis only paid a dividend in the past 9 years.
Current Payout to shareholders
What portion of Novartis's earnings are paid to the shareholders as a dividend.
  • Dividends paid are covered by earnings (1.9x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be covered by earnings (1.9x coverage).
X
Income/ dividend checks
We assess Novartis's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 1.3%) - if not then the rest of the checks are ignored.
  2. Is current dividend yield above the bottom 25% of dividend payers? (1 check)
  3. Is current dividend yield above the top 25% of dividend payers? (1 check)
  4. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  5. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  6. How sustainable is the dividend, can Novartis afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  7. Novartis has a total score of 3/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Novartis's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Vas Narasimhan
COMPENSATION $9,921,492
AGE 42
TENURE AS CEO 1.3 years
CEO Bio

Dr. Vasant Narasimhan, also known as Vas, M.D., serves as Chief Executive Officer of Novartis AG at Novartis India Ltd. Dr. Narasimhan has been Chief Executive Officer of Novartis AG since February 1, 2018. Dr. Narasimhan served as Global Head of Drug Development and Chief Medical Officer at Novartis AG from February 1, 2016 to February 1, 2018. Dr. Narasimhan has functional oversight for drug development for General Medicines, Ophthalmology Pharmaceuticals, Oncology and Dow Jones Newswires Biosimilars that creates a stronger collaboration across these units. He served as Global Head of Development at Novartis Pharmaceuticals Corporation since August 1, 2014. He joined Novartis in 2005 and has worked within the Pharmaceuticals and Vaccines businesses. He served as the Global Head of Biopharmaceuticals & Oncology Injectables at Sandoz International GmbH. He received his medical degree from Harvard Medical School in the US, a master’s degree in public policy from Harvard’s John F. Kennedy School of Government, and a bachelor’s degree in biological sciences from the University of Chicago in the US.

CEO Compensation
  • Vas's compensation has been consistent with company performance over the past year, both up more than 20%.
  • Vas's remuneration is higher than average for companies of similar size in Switzerland.
Management Team Tenure

Average tenure and age of the Novartis management team in years:

1.3
Average Tenure
48
Average Age
  • The average tenure for the Novartis management team is less than 2 years, this suggests a new team.
Management Team

Vas Narasimhan

TITLE
Chief Executive Officer
COMPENSATION
$10M
AGE
42
TENURE
1.3 yrs

Harry Kirsch

TITLE
Chief Financial Officer
COMPENSATION
$6M
AGE
53
TENURE
6 yrs

Steffen Lang

TITLE
Global Head of Technical Operations
COMPENSATION
$2M
AGE
51
TENURE
2.1 yrs

Shannon Klinger

TITLE
Group General Counsel
COMPENSATION
$2M
AGE
47
TENURE
0.9 yrs

Klaus Moosmayer

TITLE
Chief Ethics
COMPENSATION
$1M
AGE
50
TENURE
0.4 yrs

Steven Baert

TITLE
Chief People & Organization Officer
COMPENSATION
$4M
AGE
44
TENURE
5.3 yrs

Bertrand Bodson

TITLE
Chief Digital Officer
COMPENSATION
$2M
AGE
43
TENURE
1.3 yrs

John Tsai

TITLE
Head of Global Drug Development & Chief Medical Officer
COMPENSATION
$6M
AGE
51
TENURE
1 yrs

Robert Weltevreden

TITLE
Head of Novartis Business Services
COMPENSATION
$2M
AGE
49
TENURE
0.9 yrs

Jay Bradner

TITLE
President of Novartis Institutes for Biomedical Research
COMPENSATION
$6M
AGE
46
TENURE
3.2 yrs
Board of Directors Tenure

Average tenure and age of the Novartis board of directors in years:

6.3
Average Tenure
63
Average Age
  • The tenure for the Novartis board of directors is about average.
Board of Directors

Joerg Reinhardt

TITLE
Independent Non Executive Chairman
COMPENSATION
$4M
AGE
62
TENURE
5.8 yrs

Enrico Vanni

TITLE
Independent Non Executive Vice Chairman
COMPENSATION
$528K
AGE
67
TENURE
6.3 yrs

Alex Krauer

TITLE
Honorary Chairman

Dan Vasella

TITLE
Honorary Chairman
COMPENSATION
$3M
AGE
65

Srikant T. Datar

TITLE
Independent Non Executive Director
COMPENSATION
$458K
AGE
65
TENURE
16.3 yrs

Andreas von Planta

TITLE
Independent Non Executive Director
COMPENSATION
$463K
AGE
63
TENURE
13.3 yrs

Liz Doherty

TITLE
Independent Non-Executive Director
COMPENSATION
$450K
AGE
61
TENURE
3.3 yrs

Ann Fudge

TITLE
Independent Non Executive Director
COMPENSATION
$398K
AGE
67
TENURE
11.3 yrs

Charles Sawyers

TITLE
Independent Non Executive Director
COMPENSATION
$360K
AGE
59
TENURE
6.3 yrs

Bill Winters

TITLE
Independent Non Executive Director
COMPENSATION
$322K
AGE
57
TENURE
6.3 yrs
Who owns this company?
Recent Insider Trading
  • No 3 month insider trading information.
Recent Insider Transactions
Announced Type Name Entity Role Start End Shares Max Price (CHF) Value (CHF)
X
Management checks
We assess Novartis's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Novartis has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

News

Simply Wall St News

Calculating The Fair Value Of Novartis AG (VTX:NOVN)

We assume companies with shrinking free cash flow are will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. … Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 10-year free cash flow (FCF) forecast 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Levered FCF ($, Millions) $10.39k $11.93k $11.52k $11.35k $11.35k $11.45k $11.64k $11.89k $12.19k $12.52k Growth Rate Estimate Source Analyst x7 Analyst x10 Analyst x5 Est @ -1.47% Est @ -0.05% Est @ 0.95% Est @ 1.65% Est @ 2.13% Est @ 2.48% Est @ 2.72% Present Value ($, Millions) Discounted @ 8.42% $9.58k $10.15k $9.04k $8.22k $7.58k $7.05k $6.61k $6.23k $5.89k $5.58k Present Value of 10-year Cash Flow (PVCF)= $75.93b "Est" = FCF growth rate estimated by Simply Wall St The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … Terminal Value (TV) = FCF2029 × (1 + g) ÷ (r – g) = US$13b × (1 + 3.3%) ÷ (8.4% – 3.3%) = US$251b Present Value of Terminal Value (PVTV) = TV / (1 + r)10 = $US$251b ÷ ( 1 + 8.4%)10 = $112.08b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is $188.01b.

Simply Wall St -

If You Like EPS Growth Then Check Out Novartis (VTX:NOVN) Before It's Too Late

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. … Novartis maintained stable EBIT margins over the last year, all while growing revenue 8.0% to US$53b. … In the chart below, you can see how the company has grown earnings, and revenue, over time

Simply Wall St -

Do Institutions Own Novartis AG (VTX:NOVN) Shares?

Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. … We also tend to see lower insider ownership in companies that were previously publicly owned. … Our analysis of the ownership of the company, below, shows that.

Simply Wall St -

Does Novartis AG's (VTX:NOVN) P/E Ratio Signal A Buying Opportunity?

Novartis has a price to earnings ratio of 17.7, based on the last twelve months. … Price to Earnings Ratio = Price per Share (in the reporting currency) ÷ Earnings per Share (EPS) … P/E of 17.7 = $96.23 (Note: this is the share price in the reporting currency, namely, USD ) ÷ $5.44

Simply Wall St -

Is Novartis AG's (VTX:NOVN) Balance Sheet A Threat To Its Future?

the key to their continued success lies in its financial health. … This article will examine Novartis’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. … Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself

Simply Wall St -

Does Novartis AG (VTX:NOVN) Have A Place In Your Portfolio?

Novartis AG (VTX:NOVN) has pleased shareholders over the past 10 years, by paying out dividends. … The company currently pays out a dividend yield of 3.3% to shareholders, making it a relatively attractive dividend stock. … View our latest analysis for Novartis

Simply Wall St -

Investors Are Undervaluing Novartis AG (VTX:NOVN) By 38.33%

by taking the foreast future cash flows of the company and discounting them back to today's value. … Discounted Cash Flows (DCF). … If you want to learn more about discounted cash flow, the basis for my calcs can be read in detail in the Simply Wall St analysis model

Simply Wall St -

Why Novartis AG (VTX:NOVN) Is An Attractive Investment To Consider

Novartis AG (VTX:NOVN) is a company with exceptional fundamental characteristics. … Upon building up an investment case for a stock, we should look at various aspects. … that has been a rockstar for income investors, currently trading at an attractive share price

Simply Wall St -

Here's How P/E Ratios Can Help Us Understand Novartis AG (VTX:NOVN)

This article is for investors who would like to improve their understanding of price to earnings ratios (P/E ratios). … Price to Earnings Ratio = Share Price (in reporting currency) ÷ Earnings per Share (EPS) … P/E of 14.61 = $84.27 (Note: this is the share price in the reporting currency, namely, USD ) ÷ $5.77

Simply Wall St -

Is Novartis AG's (VTX:NOVN) 18% Better Than Average?

This article is for those who would like to learn about Return On Equity (ROE). … One way to conceptualize this, is that for each CHF1 of shareholders' equity it has, the company made CHF0.18 in profit. … Return on Equity = Net Profit ÷ Shareholders' Equity

Simply Wall St -

Company Info

Description

Novartis AG researches, develops, manufactures, and markets healthcare products worldwide. The company’s Innovative Medicines segment offers patented prescription medicines for patients and healthcare providers. It also provides ophthalmology, neuroscience, immunology, hepatology and dermatology, respiratory, cardio-metabolic, and established medicine products. The company’s Sandoz segment provides active ingredients and finished dosage forms of pharmaceuticals in cardiovascular, central nervous system, dermatology, gastrointestinal and hormonal therapy, metabolism, oncology, ophthalmic, pain, and respiratory areas; and finished dosage form anti-infective. It also provides active pharmaceutical ingredients and intermediates primarily antibiotics; protein- or other biotechnology-based products, including biosimilars; and biotechnology manufacturing services. The company’s Alcon segment offers intraocular lenses and equipment for cataract procedures; equipment, instruments, and devices for vitreoretinal surgeries; surgical equipment and diagnostic devices for refractive surgical procedures; and devices to treat glaucoma. It also provides viscoelastics, surgical solutions, diagnostic ophthalmic products, surgical packs, and other disposable products for cataract and vitreoretinal surgery. In addition, this segment offers contact lenses and ocular health products; over-the-counter ophthalmic products; eye drops for the temporary relief of ocular itching due to allergies; vitamins for ocular health; and iLux Device, a therapeutic device used to treat meibomian gland dysfunction. Novartis AG has collaboration agreements with Xencor; Surface Oncology; Ligand Pharmaceuticals, Inc.; Amgen; University of California, Berkeley; Bristol-Myers Squibb; IBM Watson Health; Allergan plc; Science 37, Inc.; Bill & Melinda Gates Foundation; PEAR Therapeutics; Pfizer; Conatus Pharmaceuticals Inc.; and TRIO. The company was founded in 1895 and is headquartered in Basel, Switzerland.

Details
Name: Novartis AG
NOVN
Exchange: SWX
Founded: 1895
CHF191,108,765,678
2,285,716,609
Website: http://www.novartis.com
Address: Novartis AG
Lichtstrasse 35,
Basel,
Basel-Stadt, 4056,
Switzerland
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
SWX NOVN Common Stock SIX Swiss Exchange CH CHF 23. Dec 1996
OTCPK NVSE.F Common Stock Pink Sheets LLC US USD 23. Dec 1996
DB NOT Common Stock Deutsche Boerse AG DE EUR 23. Dec 1996
XTRA NOT Common Stock XETRA Trading Platform DE EUR 23. Dec 1996
LSE 0QLR Common Stock London Stock Exchange GB CHF 23. Dec 1996
BATS-CHIXE NOVNZ Common Stock BATS 'Chi-X Europe' GB CHF 23. Dec 1996
BATS-CHIXE NOTD Common Stock BATS 'Chi-X Europe' GB EUR 23. Dec 1996
NYSE NVS SPONSORED ADR New York Stock Exchange US USD 18. Nov 1991
SWX NOVNEE CHF0.50 (2ND BUYBACK LINE) SIX Swiss Exchange CH CHF 13. Mar 2008
DB NOTA SPONSORED ADR Deutsche Boerse AG DE EUR 18. Nov 1991
LSE 0K9E SPONSORED ADR London Stock Exchange GB USD 18. Nov 1991
LSE 0QM7 CHF0.50 (2ND BUYBACK LINE) London Stock Exchange GB CHF 13. Mar 2008
BMV NVS N SPONSORED ADR Bolsa Mexicana de Valores MX MXN 18. Nov 1991
Number of employees
Current staff
Staff numbers
105,000
Novartis employees.
Industry
Pharmaceuticals
Pharmaceuticals & Biotech
Company Analysis and Financial Data Status
Area Date (UTC time)
Company Analysis updated: 2019/05/21 21:01
End of day share price update: 2019/05/21 00:00
Last estimates confirmation: 2019/05/21
Last earnings filing: 2019/04/24
Last earnings reported: 2019/03/31
Last annual earnings reported: 2018/12/31


All dates and times in UTC. All financial data provided by Standard & Poor’s Capital IQ.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.