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AstraZeneca PLC ADR (AZN) Extended Graph Analysis

July 31st, 2020 Posted by Extended Analysis No Comment yet

Company Profile

AZN logo

AstraZeneca PLC ADR (NYSE:AZN), primarily listed under London Stock Exchange. A global British-Swedish pharmaceutical biotechnology company. AZN operates as a holding company. 

The company has a variety of products for major diseases including Covid 19 vaccine. Founded on April 6, 1999 when the Swedish Astra AB and the British Zeneca Group were merged. Headquartered in Cambridge, UK.

 

AstraZeneca PLC ADR (AZN) Extended Graph Analysis

 

1. AZN CASH FLOW

AZN CASH FLOW

2015 2016 2017 2018 2019 2020
Net cash flow provided by operating activitIes 3,324,000,000 4,145,000,000 3,578,000,000 2,618,000,000 2,969,000,000 3,495,000,000
Net cash used for investing activities -4,239,000,000 -3,969,000,000 -2,328,000,000 963,000,000 -657,000,000 -976,000,000
Net cash provided by (used for) financing activities 878,000,000 -1,324,000,000 -2,936,000,000 -2,044,000,000 -1,765,000,000 -3,429,000,000
Capital expenditure -2,788,000,000 -2,314,000,000 -1,620,000,000 -1,371,000,000 -2,460,000,000 -2,076,000,000
Free cash flow 536,000,000 1,831,000,000 1,958,000,000 1,247,000,000 509,000,000 1,419,000,000
Working Capital 1,138,000,000 -1,994,000,000 -3,233,000,000 -701,000,000 -2,554,000,000 -2,554,000,000

Facts:

  • Cash from operating activities was $3.5 billion in 2020 trailing twelve months.
  • Cash from investing activities was -$976 million in 2020 trailing twelve months.
  • Net cash provided by (used for) financing activities was -$3.4 billion in 2020 trailing twelve months.
  • Capital expenditure was -$2 billion in 2020 trailing twelve months.
  • Free cash flow was $1.4 billion in 2020 trailing twelve months.
  • Working capital was -$2.6 billion in 2020 trailing twelve months.

Explanation

  • Cash from operations was erratic in movement since 2015 to 2020 trailing twelve months. It grew 5 percent from 2015.
  • Cash from investing activities were investments in property, plant and equipment, acquisitions, purchases of investments and intangibles.
  • Net cash from financing activities was debt issued, dividends payments and other financing activities.
  • Capital expenditure were purchases of property, plant and equipment, and purchases of intangibles in 2020 trailing twelve months.
  • There was free cash flow in the last five years although  erratic in movement.
  • Working capital was negative since 2016 due to current liabilities being higher than the current assets.

Interpretation

AZN has managed to generate a positive cash flow from operations in the last five years. Moreover, free cash flow was positive in five years. Current liabilities were higher than current assets impacting the working capital.

 

2. AZN BALANCE SHEET

AZN BALANCE SHEET

2015 2016 2017 2018 2019
Total cash 6,853,000,000 5,811,000,000 4,461,000,000 5,554,000,000 6,180,000,000
Current Assets 16,007,000,000 13,262,000,000 13,150,000,000 15,591,000,000 15,563,000,000
Net property, plant and equipment 6,413,000,000 6,848,000,000 7,615,000,000 7,421,000,000 8,335,000,000
Total non-current assets 44,117,000,000 49,264,000,000 50,204,000,000 45,060,000,000 45,814,000,000
Total assets 60,124,000,000 62,526,000,000 63,354,000,000 60,651,000,000 61,377,000,000
Current liabilities 14,869,000,000 15,256,000,000 16,383,000,000 16,292,000,000 18,117,000,000
Non-current liabilities 26,765,000,000 32,416,000,000 32,011,000,000 31,891,000,000 30,133,000,000
Total liabilities 41,634,000,000 47,672,000,000 48,394,000,000 48,183,000,000 48,250,000,000
Retained earnings 11,834,000,000 8,140,000,000 8,221,000,000 5,683,000,000 2,812,000,000
Stockholders equity 18,490,000,000 14,854,000,000 14,960,000,000 12,468,000,000 13,127,000,000

Facts:

  • Total cash was $6 billion in 2019.
  • Current assets were $16 billion in 2019.
  • Net property, plant and equipment was $8 billion in 2019.
  • Total non-current assets were $46 billion in 2019.
  • Total assets were $61 billion in 2019.
  • Current liabilities were $18 billion.
  • Non-current liabilities were $30 billion in 2019.
  • Total liabilities were $18 billion in 2019.
  • Total liabilities were $48 billion in 2019.
  • Retained earnings were $2.8 billion in 2019.
  • Stockholders equity was $13 billion in 2019.

Explanation

  • Total cash represents 10 percent of total assets in 2019.
  • Current assets represent 25 percent of the total assets in 2019.
  • Net property plant and equipment represents 14 percent of the total assets in 2019.
  • Total non-current assets represent 75 percent of the total assets in 2019.
  • Current assets grew 2 percent in five years.
  • Current liabilities represent 38 percent of total liabilities.
  • Current liabilities were higher than the current assets which mean that the AZN will have a hard time paying its current obligation in due time.
  • Non-current liabilities represent 62 percent of total liabilities.
  • Total liabilities represent 79 percent of total liabilities and stockholders equity.
  • Retained earnings represent 21 percent of equity.
  • Stockholders equity was 21 percent of the total liabilities and stockholders equity.

Interpretation

AZN is using more of the creditors funds than that of the shareholders investment.Moreover, the company has higher liabilities than the current liabilities which may indicate that the company will have difficulty in paying its current obligations when the due date comes.

 

3. AZN INCOME AND MARKET

AZN INCOME AND MARKET

2015 2016 2017 2018 2019 2020
Revenue 24,708,000,000 23,002,000,000 22,465,000,000 22,090,000,000 24,384,000,000 25,247,000,000
EBIT 4,114,000,000 3,572,000,000 2,292,000,000 1,510,000,000 1,702,000,000 1,825,000,000
Net Income 2,825,000,000 3,499,000,000 3,001,000,000 2,155,000,000 1,335,000,000 1,522,000,000
EBITDA 6,390,000,000 6,589,000,000 5,976,000,000 6,542,000,000 6,143,000,000 6,450,000,000
Market Capitalization 86,458,000,000 68,964,000,000 87,127,000,000 94,423,000,000 130,873,000,000 136,021,000,000
Intrinsic Value 110,302,000,000 318,091,000,000 395,772,000,000 415,463,000,000 1,716,724,000,000 2,093,704,000,000

Facts:

  • Revenue was $25 billion in 2020 trailing twelve months.
  • EBIT was $1.8 billion in 2020 trailing twelve months.
  • Net income was $1.5 billion in 2020 trailing twelve months.
  • EBITDA was $6 billion in 2020 trailing twelve months.
  • Market capitalization was $136 billion in 2020 trailing twelve months.
  • Intrinsic value was $2 trillion in 2020 trailing twelve months.

Explanation

  • Revenue has growth of 2 percent in the last five years.
  • EBIT represents 7 percent of the revenue in 2020 trailing twelve months.
  • Net income represents 6 percent of the revenue in 2020 trailing twelve months.
  • EBITDA represented 25 percent of the revenue in 2020 trailing twelve months.
  • Market capitalization grew 57 percent in five years.
  • Intrinsic value is growing year-over-year and was higher than the market capitalization.

Interpretation

The total revenue increased 5 percent from 2019 to the trailing twelve months. Market capitalization increases year-over-year from 2016 to the current date, July 27, 2020. The stock price of AZN was undervalued.

 

4. AZN FINANCIAL RATIOS

AZN FINANCIAL RATIOS

2015 2016 2017 2018 2019 2020
Asset turnover (average) 0.42 0.38 0.36 0.36 0.4 0.42
Return on assets % 4.76 5.71 4.77 3.48 2.19 2.57
Return on equity % 14.82 20.99 20.13 15.71 10.43 14.32
Return on invested capital % 10.07 12.61 11.04 8.37 5.97 6.71
Debt/Equity 0.76 0.98 1.04 1.39 1.24 1.49
Net Margin % 11.43 15.21 13.36 9.76 5.47 6.03

Facts:

  • Asset turnover was averaging 0.42 in the trailing twelve months.
  • Return on asset was 2.57 percent in the trailing twelve months.
  • Return on equity was 14.32 percent in the trailing twelve months.
  • Return on invested capital was 6.71 percent in the trailing twelve months.
  • Debt/equity ratio was 1.49 in the trailing twelve months.
  • Net margin was 6.03 percent in the trailing twelve months.

Explanation

  • Asset turnover means that for every dollar invested in an asset, AZN generates $0.42 of sales.
  • Return on assets indicate that for every dollar invested in assets, the company generates 2.57 cents of net income.
  • Return on equity indicates that for every dollar invested in equity, AZN generated 14.32 cents of profit.
  • The return on invested capital means AZN generated 6.71 cents for every dollar investment in capital.
  • Debt/Equity indicates that the company uses $1.49 in debt for every dollar in equity, in other terms, debt level is 149 percent of equity.
  • Net margin indicates that for every dollar in revenue, AZN earns $0.06 in net profit.

Interpretation

AZN has managed to generate a fair enough return on its investments in assets and in equity. 

 

5. AZN KEY EXECUTIVE COMPENSATION

AZN KEY EXECUTIVE COMPENSATION

2015 2016 2017 2018 2019
Key Executive Compensation
Salary €1,861,000 €1,897,000 €1,945,000 €2,054,000
Bonus €3,078,000 €1,791,000 €2,941,000 €2,890,000
Annual Other Income €0 €0 €0 €0
Restricted Stock Award €0 €0 €0 €0
Securities Options €8,716,000 €13,411,000 €8,202,000 €15,422,000
LTIP Payout €0 €0 €0 €0
Non-equity compensation €0 €0 €0 €0
Other Compensation €180,000 €213,000 €319,000 €353,000
Total €14,352,000 €17,839,000 €13,947,000 €21,290,000
Pascal Soriot/Executive Director, CEO
Salary €1,167,000 €1,190,000 €1,220,000 €1,289,000
Bonus €2,042,000 €1,167,000 €1,916,000 €1,933,000
Annual Other Income €0 €0 €0 €0
Restricted Stock Award €0 €0 €0 €0
Securities Options €4,723,000 €10,533,000 €5,718,000 €10,487,000
LTIP Payout €0 €0 €0 €0
Non-equity compensation €0 €0 €0 €0
Other Compensation €115,000 €142,000 €1,215,000 €234,000
Total €8,397,000 €13,389,000 €9,435,000 €14,330,000
Marc Dunoyer/Executive Director, DFO
Salary €694,000 €707,000 €725,000 €765,000
Bonus €1,036,000 €624,000 €1,025,000 €957,000
Annual Other Income €0 €0 €0 €0
Restricted Stock Award €0 €0 €0 €0
Securities Options €3,993,000 €2,878,000 €2,484,000 €4,935,000
LTIP Payout €0 €0 €0 €0
Non-equity compensation €0 €0 €0 €0
Other Compensation €65,000 €71,000 €104,000 €119,000
Total €5,955,000 €4,450,000 €4,512,000 €6,960,000

Facts:

  • Total key executive compensation in 2015 was €14,352,000.
  • Total key executive compensation in 2016 was €17,839,00.
  • Key executive compensation in 2017 was €13,947,000.
  • Key executive compensation in 2019 was €21,290,000.

Explanation:

  • The total key executive compensation in 2019 represents 1.64 percent of the net income.
  • The total compensation of Pascal Soriot/Executive Director, CEO represents 67 percent of the total key executive compensation in 2019.
  • Total compensation of Marc Dunoyer/Executive Director, DFO represents 33 percent of the total key executive compensation in 2019.

Interpretation

Total executive compensation includes salary, restricted stock award, securities options, non-equity compensation and other compensation.

 

6. AZN LOBBYING AND CONTRIBUTIONS

AZN LOBBYING AND CONTRIBUTIONS

PERIOD AMOUNT
2007 $4,935,500
2008 $5,196,000
2009 $5,932,000
2010 $5,790,000
2011 $5,640,000
2012 $3,570,000
2013 $4,180,000
2014 $2,890,000
2015 $3,048,733
2016 $2,838,980
2017 $2,389,000
2018 $2,490,000
2019 $2,880,000
2020 $1,560,000

Facts:

AZN was incurring lobbying and contribution expenses annually since 2007 to the current date as seen in the table above taken from OpenSecret.org.

Explanation

A note from OpenSecret.org Center for Responsive Politics, quoted below:

NOTE: Figures on this page are calculations by the Center for Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on July 23, 2020 and includes spending from January 1 – June 30. Prior years include spending from January through December.”

Interpretation

The amount of contributions by the company varies every cycle depending on the attention given by the federal government on their issues.

 

7. AZN FINANCIAL STRENGTH

AZN FINANCIAL STRENGTH

DATA

Working Capital -$2,554,000,000
Total Assets $61,377,000,000
Sales $25,247,000,000
EBIT $1,825,000,000
Market value of equity $152,407,200,000
Book value of total liabilities $48,250,000,000
Retained earnings $2,812,000,000

CALCULATION

Ratio Score Result
A – Working Capital / Total Assets -0.04 1.2 -0.05
B – Retained Earnings / Total Assets 0.05 1.4 0.06
C – EBIT / Total Assets 0.03 3.3 0.10
D – Market Value of Equity / Book Value of Total Liabilities 3.16 0.6 1.90
E – Sales / Total Assets 0.41 1 0.41
Z-Score 2.42

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The Z-Score of AstraZeneca was calculated at 2.42. According to Dr. Altman a score of 1.8 to 3.0 indicates that the company is likely to declare bankruptcy in the future. In other words, it indicates that the company is gradually approaching bankruptcy or insolvency. The main factors of this statistical measurement are profitability, liquidity, leverage and efficiency. AZN has a negative working capital structure which impacted its financial strength.

Overview

The company is leveraging more than its equity, The working capital was negative since 2014 due to higher liabilities than current assets. The ratio between equity and liabilities was 26.58 percent.The creditors have more stake than the stockholders. The company has not suffered a negative bottom line in the last five years, the management was able to generate sufficient revenue for the operation of the business. 

Moreover, the calculated intrinsic value was higher than that of the market value. The stock price of AZN was undervalued which may mean a weak investment demand. AZN is head-to-head in developing a vaccine for Covid 19 and has already undergone several trial testing. Foreseen soar in revenue in the near financial period. On the other hand, might indicate a good opportunity for a Buy. 

Citation

https://www.astrazeneca.com/

https://www.morningstar.com/stocks/xnys/azn/quote

https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2020&id=D000043112

Research and written by Criselda

 

 

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