Unpacking the Investment Potential of West Pharmaceutical Services Inc (WST): A Deep Dive into Key Financial Metrics

Exploring the robust financial stance and competitive strengths of West Pharmaceutical Services Inc (WST)

West Pharmaceutical Services Inc (WST, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $396.37, West Pharmaceutical Services Inc has witnessed a decline of 1.85% over a period, marked against a three-month change of 13.59%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that West Pharmaceutical Services Inc is well-positioned for substantial growth in the near future.


Decoding the GF Score

The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.

West Pharmaceutical Services Inc has been assigned the following ranks:

Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and a slightly lower rank in GF Value, GuruFocus assigned West Pharmaceutical Services Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.

Understanding West Pharmaceutical Services Inc's Business

West Pharmaceutical Services is a Pennsylvania-based medical supplies company that operates as a key supplier to firms in the pharmaceutical, biotechnology, and generic drug industries. With a market cap of $29.28 billion and sales of $2.87 billion, the company develops, manufactures, and distributes elastomer-based supplies for the containment and administration of injectable drugs, including basic equipment such as syringes, stoppers, and plungers, along with somewhat more complicated devices including auto-injectors and other self-injection platforms. The company reports in two segments: proprietary products (82% of 2021 sales) and contract-manufactured products (18%). It generates 55% of its revenue from international markets and 45% from the United States.


Financial Strength Breakdown

According to the Financial Strength rating, West Pharmaceutical Services Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for West Pharmaceutical Services Inc stands impressively at 79.92, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 22.42, West Pharmaceutical Services Inc exhibits a strong defense against financial distress. With a favorable Debt-to-Revenue ratio of 0.11, West Pharmaceutical Services Inc's strategic handling of debt solidifies its financial health.

Profitability Rank Breakdown

The Profitability Rank shows West Pharmaceutical Services Inc's impressive standing among its peers in generating profit. West Pharmaceutical Services Inc Operating Margin has increased (86.87%) over the past five years. Furthermore, West Pharmaceutical Services Inc's Gross Margin has seen a consistent rise over the past five years, underscoring the company's growing proficiency in transforming revenue into profit.

Growth Rank Breakdown

Ranked highly in Growth, West Pharmaceutical Services Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 16%, which outperforms better than 70.34% of 725 companies in the Medical Devices & Instruments industry. Moreover, West Pharmaceutical Services Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years.



Given the company's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights West Pharmaceutical Services Inc's unparalleled position for potential outperformance. This robust financial stance, coupled with its strategic business operations, makes West Pharmaceutical Services Inc a compelling investment opportunity for value investors.

GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen


I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.