Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
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- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
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Current Valuation Ratios
Illumina Inc., current price multiples
| Illumina Inc. | AbbVie Inc. | Amgen Inc. | Bristol-Myers Squibb Co. | Danaher Corp. | Eli Lilly & Co. | Gilead Sciences Inc. | Johnson & Johnson | Merck & Co. Inc. | Pfizer Inc. | Regeneron Pharmaceuticals Inc. | Thermo Fisher Scientific Inc. | Vertex Pharmaceuticals Inc. | Pharmaceuticals, Biotechnology & Life Sciences | Health Care | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||
| Current share price (P) | ||||||||||||||||||
| No. shares of common stock outstanding | ||||||||||||||||||
| Growth rate (g) | ||||||||||||||||||
| Earnings per share (EPS) | ||||||||||||||||||
| Next year expected EPS | ||||||||||||||||||
| Operating profit per share | ||||||||||||||||||
| Sales per share | ||||||||||||||||||
| Book value per share (BVPS) | ||||||||||||||||||
| Valuation Ratios (Price Multiples) | ||||||||||||||||||
| Price to earnings (P/E) | ||||||||||||||||||
| Price to next year expected earnings | ||||||||||||||||||
| Price-earnings-growth (PEG) | ||||||||||||||||||
| Price to operating profit (P/OP) | ||||||||||||||||||
| Price to sales (P/S) | ||||||||||||||||||
| Price to book value (P/BV) | ||||||||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Illumina Inc., historical price multiples
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Price to earnings (P/E) | ||||||
| Price to operating profit (P/OP) | ||||||
| Price to sales (P/S) | ||||||
| Price to book value (P/BV) |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
The financial ratios over the five-year period reveal several notable trends and fluctuations.
- Price to Earnings (P/E) Ratio
- The P/E ratio showed a general fluctuation between 2016 and 2019, ranging from a high of 52.01 in 2016 to a low of 43.43 in 2019. However, in 2020, there was a sharp increase to 109.92, indicating a significant rise in market valuation relative to earnings during that year.
- Price to Operating Profit (P/OP) Ratio
- This ratio followed a similar pattern to the P/E ratio, with fluctuations over the years. It peaked at 53.47 in 2017, then decreased to 44.17 by 2019, before more than doubling in 2020 to 124.33. This suggests a substantial expansion in the market price relative to operating profit in 2020.
- Price to Sales (P/S) Ratio
- The P/S ratio exhibited a consistent upward trend from 10.03 in 2016 to 12.89 in 2018, maintaining a slightly lower level in 2019 at 12.28, then sharply increasing to 22.26 in 2020. This demonstrates a growing investor willingness to pay more per unit of sales, especially pronounced in the last year.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio remained relatively stable from 2016 through 2018, fluctuating around 11.43 to 11.79, but experienced a decline to 9.43 in 2019. Subsequently, it surged to 15.36 in 2020, indicating a substantial increase in the market valuation compared to the company's book value.
Overall, the year 2020 marked a significant escalation across all valuation multiples, especially pronounced in the P/E and P/OP ratios, reflecting increased market optimism or valuation expansion relative to earnings, operating profit, sales, and book value. Prior to this year, the ratios displayed moderate fluctuations with no consistent upward or downward trend.
Price to Earnings (P/E)
Illumina Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Net income attributable to Illumina stockholders (in millions) | ||||||
| Earnings per share (EPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/E ratio4 | ||||||
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| P/E Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| P/E Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Data adjusted for splits and stock dividends.
2 2020 Calculation
EPS = Net income attributable to Illumina stockholders ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Illumina Inc. Annual Report.
4 2020 Calculation
P/E ratio = Share price ÷ EPS
= ÷ =
5 Click competitor name to see calculations.
The analysis of the company's financial performance over the specified period reveals several key trends and notable changes.
- Share Price
- The share price exhibits a consistent upward trend from 2016 through 2020, rising from $164.46 in 2016 to $494.24 in 2020. This represents a significant appreciation in market value, with the most substantial increase occurring between 2019 and 2020, when the share price jumped from $296 to $494.24.
- Earnings Per Share (EPS)
- EPS generally increased from 2016 to 2019, moving from $3.16 in 2016 to a peak of $6.82 in 2019. However, in 2020, there was a notable decline in EPS to $4.50. This decrease contrasts with the rising trend observed in the previous years and indicates a reduction in profitability on a per-share basis during the last year.
- Price-to-Earnings (P/E) Ratio
- The P/E ratio showed some fluctuation over the years, starting at 52.01 in 2016, dipping to 43.43 in 2019, and then increasing sharply to 109.92 in 2020. The significant rise in P/E in 2020 can be attributed to the sharp increase in share price combined with the decrease in EPS, suggesting that the market's valuation of the company became considerably more optimistic despite a decline in earnings.
In summary, while the company's market value as reflected by the share price has grown substantially over the five-year period, earnings performance weakened in 2020 after a consistent rise in previous years. The sharp increase in the P/E ratio in 2020 indicates a divergence between market expectations and actual earnings, potentially reflecting investor confidence in future growth or other qualitative factors not captured in the earnings figure.
Price to Operating Profit (P/OP)
Illumina Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Income from operations (in millions) | ||||||
| Operating profit per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/OP ratio4 | ||||||
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| P/OP Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| P/OP Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Data adjusted for splits and stock dividends.
2 2020 Calculation
Operating profit per share = Income from operations ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Illumina Inc. Annual Report.
4 2020 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= ÷ =
5 Click competitor name to see calculations.
- Share Price Trend
- The share price exhibited a consistent upward trajectory from 2016 to 2020. Starting at $164.46 in 2016, it increased to $220.44 in 2017, continuing its rise to $292.20 in 2018, and $296.00 in 2019, before experiencing a significant jump to $494.24 in 2020.
- Operating Profit Per Share Trend
- Operating profit per share showed moderate growth from 2016 to 2019, increasing from $4.01 in 2016 to $4.12 in 2017, then accelerating to $6.01 in 2018 and further to $6.70 in 2019. However, in 2020, it declined sharply to $3.98, returning to a level close to the 2016 figure.
- Price to Operating Profit Ratio (P/OP) Trend
- The price to operating profit ratio (P/OP) fluctuated over the years, starting at 40.99 in 2016, rising to a peak of 53.47 in 2017, before declining to 48.64 in 2018 and further to 44.17 in 2019. In 2020, this ratio surged dramatically to 124.33, reflecting a substantial increase in share price combined with a decline in operating profit per share.
- Overall Analysis
- The data indicates a strong growth in share price over the entire period, with an especially notable increase in 2020. Despite this, operating profit per share did not maintain a similar upward trend and instead decreased significantly in 2020. The resulting sharp rise in the P/OP ratio in 2020 suggests the market may have priced in expectations that were not matched by operating profits, highlighting potential overvaluation or anticipated future performance not yet realized in earnings.
Price to Sales (P/S)
Illumina Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Revenue (in millions) | ||||||
| Sales per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/S ratio4 | ||||||
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| P/S Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| P/S Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Data adjusted for splits and stock dividends.
2 2020 Calculation
Sales per share = Revenue ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Illumina Inc. Annual Report.
4 2020 Calculation
P/S ratio = Share price ÷ Sales per share
= ÷ =
5 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals notable trends in the share price, sales per share, and price-to-sales (P/S) ratio.
- Share Price
- The share price showed consistent growth from 2016 to 2020, increasing from $164.46 in 2016 to $494.24 in 2020. This represents a substantial appreciation, with particularly strong growth observed between 2019 and 2020, where the share price rose by approximately 67%.
- Sales Per Share
- Sales per share steadily increased from 2016 to 2019, rising from $16.39 in 2016 to $24.10 in 2019, indicating improved revenue generation relative to the number of shares outstanding. However, in 2020, sales per share declined slightly to $22.20, suggesting a minor reduction in per-share sales despite the rising share price.
- Price-to-Sales (P/S) Ratio
- The P/S ratio grew consistently from 10.03 in 2016 to 12.89 in 2018, with a slight dip to 12.28 in 2019. In 2020, the P/S ratio rose sharply to 22.26, which is a significant increase compared to prior years. This sharp increase indicates that the market valuation expanded much faster than the sales per share, reflecting heightened investor expectations or potentially increased market speculation.
Overall, the data shows a robust increase in share price driven by growing sales per share during the early years. However, by 2020, despite a slight decrease in sales per share, the share price and P/S ratio surged significantly, indicating a decoupling of market valuation from underlying per-share sales performance. This trend might suggest increased investor optimism or reevaluation of the company's future prospects not fully aligned with sales growth.
Price to Book Value (P/BV)
Illumina Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Total Illumina stockholders’ equity (in millions) | ||||||
| Book value per share (BVPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/BV ratio4 | ||||||
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
| P/BV Ratio, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | ||||||
| P/BV Ratio, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Data adjusted for splits and stock dividends.
2 2020 Calculation
BVPS = Total Illumina stockholders’ equity ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of Illumina Inc. Annual Report.
4 2020 Calculation
P/BV ratio = Share price ÷ BVPS
= ÷ =
5 Click competitor name to see calculations.
- Share Price
- The share price demonstrated a consistent and strong upward trend over the five-year period. Starting at $164.46 in 2016, it increased to $220.44 in 2017, then sharply rose to $292.20 in 2018, followed by a modest increase to $296.00 in 2019, and finally experienced a substantial jump to $494.24 by the end of 2020.
- Book Value Per Share (BVPS)
- Book value per share showed steady growth throughout the years. The value increased from $15.02 at the end of 2016 to $18.70 in 2017, then to $25.56 in 2018, continuing upward to $31.38 in 2019, and finally reaching $32.17 in 2020. This consistent rise indicates improving underlying net asset value per share over the period.
- Price-to-Book Value Ratio (P/BV)
- The price-to-book value ratio fluctuated during the period. It began at 10.95 in 2016, increased to 11.79 in 2017, then slightly decreased to 11.43 in 2018. A noticeable decline was observed in 2019 down to 9.43, suggesting a relatively lower market valuation compared to book value. However, in 2020, the ratio rose sharply to 15.36, reflecting a significant increase in market valuation relative to the book value per share.
- Overall Analysis
- Throughout the examined period, both the share price and book value per share experienced growth, indicating overall positive performance and asset base expansion. The fluctuations in the price-to-book ratio suggest periods where market sentiment either favored or discounted the company's book value. The marked increase in the P/B ratio in 2020 implies heightened investor confidence or expectations relative to the company's asset value, which aligns with the substantial rise in share price that year.