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).
Current Valuation Ratios
Allergan Inc., current price multiples
| Allergan 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. | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||
| Current share price (P) | $231.12 | |||||||||||||
| No. shares of common stock outstanding | 300,237,694 | |||||||||||||
| Growth rate (g) | -279.49% | |||||||||||||
| Earnings per share (EPS) | $5.08 | |||||||||||||
| Next year expected EPS | $-9.11 | |||||||||||||
| Operating profit per share | $6.69 | |||||||||||||
| Sales per share | $23.73 | |||||||||||||
| Book value per share (BVPS) | $25.82 | |||||||||||||
| Valuation Ratios (Price Multiples) | ||||||||||||||
| Price to earnings (P/E) | 45.53 | 111.52 | 28.23 | 17.26 | 41.94 | 52.79 | 21.02 | 22.91 | 19.18 | 20.17 | 16.88 | 36.21 | 32.21 | |
| Price to operating profit (P/OP) | 34.53 | 31.26 | 23.97 | 12.17 | 32.32 | 41.43 | 17.84 | 24.28 | 16.50 | 11.00 | 21.26 | 31.34 | 30.51 | |
| Price to sales (P/S) | 9.74 | 7.71 | 6.19 | 2.53 | 6.17 | 16.72 | 6.18 | 6.52 | 5.39 | 2.50 | 5.30 | 5.45 | 10.61 | |
| Price to book value (P/BV) | 8.95 | — | 25.14 | 6.59 | 2.89 | 41.06 | 7.88 | 7.53 | 6.66 | 1.81 | 2.43 | 4.55 | 6.82 | |
Based on: 10-K (reporting date: 2014-12-31).
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)
Allergan Inc., historical price multiples
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
An analysis of the valuation multiples between 2010 and 2014 reveals a general expansion in market valuation, characterized by a steady increase in price multiples across most metrics from 2011 onward.
- Price to Earnings (P/E)
- The P/E ratio exhibited an extreme anomaly in 2010 at 37,139.77. Following this, the ratio normalized to 28.94 in 2011 and remained stable through 2012. A subsequent upward trend emerged, with the ratio increasing to 38.04 in 2013 and reaching 45.53 by 2014, indicating a significant rise in investor willingness to pay for earnings.
- Price to Operating Profit (P/OP)
- The P/OP ratio began at 86.17 in 2010 before experiencing a sharp decline to 19.81 in 2011. The ratio remained largely stagnant through 2013 at approximately 20.71, followed by a sharp increase to 34.53 in 2014, aligning with the overall trend of multiple expansion seen in other ratios.
- Price to Sales (P/S)
- A consistent and uninterrupted upward trajectory is observed in the P/S ratio. The value grew from 4.62 in 2010 to 6.05 in 2013, with the growth rate accelerating in 2014 to reach 9.74. This suggests a progressively higher market premium attributed to the company's revenue streams.
- Price to Book Value (P/BV)
- The P/BV ratio demonstrated a steady annual increase from 4.68 in 2010 to 5.80 in 2013. Similar to the P/S ratio, a marked acceleration occurred in 2014, with the ratio rising to 8.95, reflecting an increase in the market value relative to the company's equity book value.
Overall, the data indicates that while 2010 was marked by extreme volatility or non-standard results in earnings-based multiples, the period from 2011 to 2014 was defined by a systematic increase in all valuation multiples, peaking in 2014.
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Price to Earnings (P/E)
Allergan Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 300,237,694 | 298,467,649 | 298,083,478 | 304,442,771 | 305,677,123 | |
| Selected Financial Data (US$) | ||||||
| Net earnings attributable to Allergan, Inc. (in thousands) | 1,524,200) | 985,100) | 1,098,800) | 934,500) | 600) | |
| Earnings per share (EPS)2 | 5.08 | 3.30 | 3.69 | 3.07 | 0.00 | |
| Share price1, 3 | 231.12 | 125.54 | 107.05 | 88.82 | 72.90 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 45.53 | 38.04 | 29.04 | 28.94 | 37,139.77 | |
| 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. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 Data adjusted for splits and stock dividends.
2 2014 Calculation
EPS = Net earnings attributable to Allergan, Inc. ÷ No. shares of common stock outstanding
= 1,524,200,000 ÷ 300,237,694 = 5.08
3 Closing price as at the filing date of Allergan Inc. Annual Report.
4 2014 Calculation
P/E ratio = Share price ÷ EPS
= 231.12 ÷ 5.08 = 45.53
5 Click competitor name to see calculations.
The valuation metrics from 2010 to 2014 demonstrate a period of significant share price appreciation and an expanding valuation multiple. While earnings showed overall growth, the share price increased at a faster rate, leading to a higher price-to-earnings premium by the end of the period.
- Share Price Trajectory
- A consistent upward trend is observed in the share price, which rose from 72.90 US$ in 2010 to 231.12 US$ in 2014. The most substantial growth occurred between 2013 and 2014, where the price increased by approximately 84%, indicating a sharp acceleration in market valuation.
- Earnings Per Share (EPS) Performance
- Earnings transitioned from a zero value in 2010 to 3.07 US$ in 2011. Following a peak of 3.69 US$ in 2012, a slight contraction to 3.30 US$ was recorded in 2013 before earnings rebounded strongly to 5.08 US$ in 2014. This suggests that while earnings generally trended upward, they experienced moderate volatility prior to the 2014 surge.
- Price-to-Earnings (P/E) Ratio Analysis
- The P/E ratio in 2010 was anomalous at 37,139.77 due to the near-zero EPS. From 2011 onward, the ratio stabilized and entered a growth phase, moving from 28.94 in 2011 to 45.53 in 2014. The steady increase in the P/E ratio indicates that investors were willing to pay an increasing premium for each dollar of earnings, reflecting heightened growth expectations or a shift in market sentiment toward the equity.
The divergence between the growth rate of the share price and the growth rate of the EPS resulted in the expansion of the P/E multiple. The significant spike in both price and the P/E ratio in 2014 suggests a strong bullish outlook from the market that exceeded the immediate growth in fundamental earnings.
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Price to Operating Profit (P/OP)
Allergan Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 300,237,694 | 298,467,649 | 298,083,478 | 304,442,771 | 305,677,123 | |
| Selected Financial Data (US$) | ||||||
| Operating income (in thousands) | 2,009,300) | 1,809,300) | 1,613,300) | 1,365,100) | 258,600) | |
| Operating profit per share2 | 6.69 | 6.06 | 5.41 | 4.48 | 0.85 | |
| Share price1, 3 | 231.12 | 125.54 | 107.05 | 88.82 | 72.90 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 34.53 | 20.71 | 19.78 | 19.81 | 86.17 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 Data adjusted for splits and stock dividends.
2 2014 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 2,009,300,000 ÷ 300,237,694 = 6.69
3 Closing price as at the filing date of Allergan Inc. Annual Report.
4 2014 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 231.12 ÷ 6.69 = 34.53
5 Click competitor name to see calculations.
Between 2010 and 2014, the valuation of common stock exhibited significant volatility in its relationship to operating profitability, transitioning from an extreme premium to a period of stability, and finally to a renewed expansion in the price multiple.
- Share Price Performance
- A consistent upward trajectory is observed in the share price over the five-year period. The price increased steadily from 72.90 US$ in 2010 to 125.54 US$ in 2013, followed by a substantial acceleration in 2014, where the price reached 231.12 US$. This represents a total increase of approximately 217% over the analyzed timeframe.
- Operating Profit per Share Trends
- Operating profit per share experienced a sharp increase between 2010 and 2011, rising from 0.85 US$ to 4.48 US$. Following this initial surge, the growth rate normalized, showing steady annual increments to reach 6.69 US$ by December 31, 2014. The most significant growth phase occurred in the first year of the period, where profitability per share increased more than fivefold.
- Price to Operating Profit (P/OP) Ratio Analysis
- The P/OP ratio demonstrates three distinct phases. Initially, in 2010, the ratio was exceptionally high at 86.17, indicating a valuation heavily decoupled from current operating profits. From 2011 to 2013, the ratio stabilized within a narrow range between 19.78 and 20.71, as share price growth aligned more closely with profitability gains. However, in 2014, the ratio surged to 34.53. This final increase was driven by a disproportionate spike in the share price that far outpaced the growth in operating profit per share, suggesting a significant increase in market expectations or a revaluation of the company's future earnings potential.
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Price to Sales (P/S)
Allergan Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 300,237,694 | 298,467,649 | 298,083,478 | 304,442,771 | 305,677,123 | |
| Selected Financial Data (US$) | ||||||
| Product net sales (in thousands) | 7,126,100) | 6,197,500) | 5,708,800) | 5,347,100) | 4,819,600) | |
| Sales per share2 | 23.73 | 20.76 | 19.15 | 17.56 | 15.77 | |
| Share price1, 3 | 231.12 | 125.54 | 107.05 | 88.82 | 72.90 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 9.74 | 6.05 | 5.59 | 5.06 | 4.62 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 Data adjusted for splits and stock dividends.
2 2014 Calculation
Sales per share = Product net sales ÷ No. shares of common stock outstanding
= 7,126,100,000 ÷ 300,237,694 = 23.73
3 Closing price as at the filing date of Allergan Inc. Annual Report.
4 2014 Calculation
P/S ratio = Share price ÷ Sales per share
= 231.12 ÷ 23.73 = 9.74
5 Click competitor name to see calculations.
A consistent upward trajectory is observed across all three financial metrics from 2010 through 2014. While sales per share grew steadily, the share price experienced an accelerated rate of appreciation, resulting in a significant expansion of the price-to-sales (P/S) multiple over the five-year period.
- Share Price Trends
- The share price increased incrementally from 72.90 US$ in 2010 to 125.54 US$ in 2013. A substantial acceleration occurred in 2014, where the price rose to 231.12 US$, representing a sharp increase relative to the growth observed in previous years.
- Sales per Share Growth
- Sales per share exhibited stable and linear growth, rising from 15.77 US$ in 2010 to 23.73 US$ in 2014. This trend indicates a consistent improvement in the revenue generated per outstanding share throughout the analyzed period.
- Price to Sales (P/S) Multiple Analysis
- The P/S ratio rose steadily from 4.62 in 2010 to 6.05 in 2013, reflecting a gradual increase in market valuation relative to revenue. In 2014, the ratio experienced a sharp expansion to 9.74. This divergence indicates that the share price appreciation significantly outpaced the growth in sales per share, suggesting a substantially higher valuation premium was applied to the company's revenue in the final year.
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Price to Book Value (P/BV)
Allergan Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 300,237,694 | 298,467,649 | 298,083,478 | 304,442,771 | 305,677,123 | |
| Selected Financial Data (US$) | ||||||
| Total Allergan, Inc. stockholders’ equity (in thousands) | 7,753,000) | 6,463,200) | 5,837,100) | 5,309,600) | 4,757,700) | |
| Book value per share (BVPS)2 | 25.82 | 21.65 | 19.58 | 17.44 | 15.56 | |
| Share price1, 3 | 231.12 | 125.54 | 107.05 | 88.82 | 72.90 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 8.95 | 5.80 | 5.47 | 5.09 | 4.68 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 Data adjusted for splits and stock dividends.
2 2014 Calculation
BVPS = Total Allergan, Inc. stockholders’ equity ÷ No. shares of common stock outstanding
= 7,753,000,000 ÷ 300,237,694 = 25.82
3 Closing price as at the filing date of Allergan Inc. Annual Report.
4 2014 Calculation
P/BV ratio = Share price ÷ BVPS
= 231.12 ÷ 25.82 = 8.95
5 Click competitor name to see calculations.
A consistent upward trend in valuation is observed between 2010 and 2014, characterized by an accelerating divergence between the market price and the accounting book value. While the underlying asset value grew linearly, the market valuation premium expanded significantly, particularly in the final year of the period.
- Share Price Appreciation
- The share price exhibited sustained growth throughout the five-year period, rising from US$ 72.90 in 2010 to US$ 231.12 in 2014. The most significant acceleration occurred between 2013 and 2014, where the price increased by approximately 84% within a single year.
- Book Value per Share (BVPS) Growth
- Book value per share demonstrated a steady and incremental increase, moving from US$ 15.56 in 2010 to US$ 25.82 in 2014. This progression reflects a consistent accumulation of net assets on a per-share basis, though the growth rate remained modest relative to the share price trajectory.
- Price to Book Value (P/BV) Expansion
- The P/BV ratio increased from 4.68 in 2010 to 8.95 in 2014. A gradual rise was noted from 2010 to 2013, with the ratio moving from 4.68 to 5.80. A sharp escalation to 8.95 was recorded in 2014, indicating a substantial increase in the premium investors were willing to pay over the company's book value, suggesting a shift in market sentiment or an increased valuation of intangible assets.
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