Amgen Inc. (NASDAQ:AMGN)

The valuation profile for the period analyzed exhibits significant volatility in earnings-based multiples, particularly during 2024, while revenue-based metrics remained relatively stable. A pronounced correction is observed in the book value multiple during the first half of the period, followed by a period of stabilization.

Price to Earnings (P/E) Ratio

The P/E ratio demonstrated a fluctuating trend, beginning at 22.23 in March 2022 and declining to a low of 16.18 by March 2023. A substantial surge occurred throughout 2024, peaking at 53.65 in June 2024, which represents a sharp deviation from the historical average. Following this peak, the ratio underwent a correction, returning to a range between 22.82 and 25.81 by the end of the observed period.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio closely mirrored the trajectory of the P/E ratio. It maintained a baseline between 13.40 and 15.88 during 2022 before rising significantly in 2024 to reach a maximum of 27.68 in September 2024. Similar to the P/E trend, this ratio receded toward the end of 2025 and early 2026, settling at 16.84.

Price to Sales (P/S) Ratio

The P/S ratio exhibited the highest degree of stability among the valuation metrics. Values fluctuated within a narrow band, ranging from a low of 4.57 in June 2025 to a high of 5.93 in March 2024. This suggests that the market valuation relative to revenue remained consistent despite the volatility seen in profit-based multiples.

Price to Book Value (P/BV) Ratio

A dramatic downward trend is evident in the P/BV ratio, starting from an extreme high of 138.87 in March 2022. The ratio declined sharply throughout 2022 and 2023, reaching 17.87 by September 2023. For the remainder of the period, the ratio stabilized, oscillating between 17.91 and 33.25, indicating a significant reduction in the premium assigned to the book value of the company.

Analysis of the correlated movements suggests that the valuation spikes in 2024 were driven by factors affecting earnings and operating profit rather than revenue growth. The steep decline in the book value multiple suggests a fundamental realignment of the market's perception of the company's equity base relative to its share price.

The valuation of the common stock exhibits three distinct phases characterized by initial stability, a period of extreme volatility in valuation multiples, and a subsequent return to historical norms.

Price-to-Earnings (P/E) Ratio Trends

Between March 2022 and December 2023, the P/E ratio maintained a relatively tight range, fluctuating between 16.18 and 23.14. However, a significant divergence occurred during the first half of 2024, where the ratio spiked to a peak of 53.65 by June 30, 2024. This represents a substantial expansion in the valuation multiple, indicating that the market price remained elevated despite a sharp contraction in earnings. From March 2025 onward, the ratio normalized, returning to a range of 22.82 to 25.81.

Earnings per Share (EPS) Performance

Earnings remained stable throughout 2022 and early 2023, peaking at 14.92 in June 2023. A severe decline is observed in 2024, with EPS dropping to a low of 5.83 in June 2024. This precipitous fall in earnings was the primary driver behind the P/E ratio expansion during that period. A strong recovery followed in 2025, with earnings ascending back to 14.30 by year-end and maintaining that level into early 2026.

Share Price Correlation

The share price demonstrated a general upward trajectory, rising from 238.13 in March 2022 to a peak of 369.19 in December 2025. Notably, the share price did not decline in tandem with the earnings drop in 2024; instead, it remained above 300.00 for much of the year. This disconnect between price and earnings suggests that market sentiment remained bullish or anticipated a recovery during the earnings trough, which was subsequently realized in 2025.

The overall data indicates a temporary valuation anomaly in 2024 caused by a sharp decrease in earnings rather than a speculative price bubble. The convergence of a recovering EPS and a stabilizing share price in 2025 and 2026 has restored the P/E ratio to a baseline consistent with the 2022-2023 period.

An analysis of the Price to Operating Profit (P/OP) ratio reveals a significant evolution in valuation multiples from early 2022 through early 2026, characterized by a period of expansion followed by a corrective normalization.

Valuation Trend Analysis

Between March 2022 and December 2022, the P/OP ratio remained relatively stable, fluctuating within a narrow range between 13.40 and 15.88. Starting in 2023, a distinct upward trajectory emerged, culminating in a peak ratio of 27.68 by September 30, 2024. This represents a substantial expansion in the multiple the market applied to operating profits during this period.

Operating Profit and Price Divergence

The spike in the P/OP ratio during 2024 was driven by a divergence between share price and operational performance. While the share price climbed to a peak of 320.16 in September 2024, operating profit per share simultaneously experienced a contraction, reaching its lowest points between June and September 2024 at 11.52 and 11.57 respectively. This combination of rising equity prices and declining operating yields accelerated the valuation multiple to its highest observed level.

Recovery and Ratio Compression

A trend toward valuation compression is observed from late 2024 through March 31, 2026. The P/OP ratio declined from 21.55 in December 2024 to 16.84 by the end of the period. This decline was primarily catalyzed by a strong recovery in operating profit per share, which rose consistently to reach 19.58 by March 31, 2026. The increase in operational profitability, coupled with a moderate adjustment in share price, effectively returned the P/OP ratio toward the historical baseline established in 2022.

An analysis of the valuation metrics reveals a period of consistent fundamental growth in revenue efficiency contrasted by fluctuating market sentiment as reflected in the share price and the resulting Price-to-Sales (P/S) ratio.

Sales per Share Growth

A steady and uninterrupted upward trend is observed in sales per share, which increased from 45.74 US$ in March 2022 to 65.76 US$ by March 2026. This consistent growth indicates a sustained increase in the company's ability to generate revenue on a per-share basis throughout the analyzed period.

Price-to-Sales (P/S) Ratio Trends

The P/S ratio exhibited significant volatility, oscillating between a low of 4.57 and a high of 5.93. The ratio initially climbed to 5.85 in September 2022, followed by a period of relative stability around 5.14 through the first half of 2023. A secondary peak occurred in March 2024, where the ratio reached its maximum value of 5.93.

Valuation Compression and Recovery

A notable period of valuation compression occurred between March 2024 and June 2025. Despite the continued rise in sales per share, the P/S ratio declined from 5.93 to 4.57. This divergence suggests that the share price did not keep pace with revenue growth during this interval, leading to a more conservative valuation per dollar of sales. This trend reversed sharply in late 2025, with the ratio ascending to 5.66 by December 2025 before correcting to 5.02 in March 2026.

Correlation Between Price and Revenue

The relationship between share price and sales per share demonstrates that while revenue growth remained linear, market valuation was subject to greater variance. The peak share price of 369.19 US$ in December 2025 coincided with a sharp spike in the P/S ratio, indicating that the price increase during that quarter was driven by factors beyond organic revenue growth.

The valuation metrics exhibit a significant transition in the relationship between market price and book value over the analyzed period. The Price to Book Value (P/BV) ratio experienced a dramatic contraction from an initial peak in early 2022, eventually stabilizing within a much lower and more consistent range by 2026.

Price to Book Value (P/BV) Trajectory

A sharp downward trend is observed from March 31, 2022, where the P/BV ratio stood at 138.87, declining to 17.87 by September 30, 2023. Following this period of rapid decompression, the ratio entered a phase of moderate volatility, peaking again at 33.25 in March 2024 before oscillating between approximately 17.91 and 26.61 through March 31, 2026.

Book Value Per Share (BVPS) Evolution

The contraction in the P/BV ratio was primarily driven by a substantial increase in the Book Value Per Share. BVPS rose from a low of 1.71 US$ in March 2022 to a peak of 17.86 US$ in September 2025. This growth in the underlying book value significantly mitigated the valuation premium previously seen in the market price.

Share Price Correlation

The share price demonstrated a general upward trajectory, moving from 238.13 US$ in March 2022 to 329.82 US$ by March 31, 2026. However, the rate of increase in the share price was significantly outpaced by the growth in BVPS during the first two years of the period, which accounts for the steep decline in the P/BV multiple.

Valuation Stability Analysis

The period between December 31, 2023, and March 31, 2026, is characterized by an inverse relationship between BVPS fluctuations and the P/BV ratio. For instance, a dip in BVPS to 9.36 US$ in March 2024 coincided with a spike in the P/BV ratio to 33.25, suggesting that the market valuation remained relatively resilient even as the accounting book value fluctuated.

Overall, the data indicates a shift from an extreme valuation premium to a more normalized pricing structure relative to the company's book value, characterized by a stronger equity base and a more stable valuation multiple in the latter half of the period.