On August 15, shareholders of AbbVie Inc. (ABBV, Financial) will receive the quarterly cash dividend.
The board of directors of the biopharmaceutical company, which was spun off of Abbott Laboratories (ABT, Financial) in 2013, has authorized the treasury office to disperse to each shareholder 96 cents per share.
The distribution of the free cash flow is on par with the previous dividend. To benefit, investors must be on AbbVie’s record no later than July 13. The ex-dividend date is July 12.
If held constant, the quarterly cash dividend will lead to a forward annual dividend of $3.84 per share, granting 3.88%.
Shareholders of AbbVie are some of the best paid cash recipients in the biopharmaceutical industry. This is due to the fact the business can squeeze cash flow at a tune of $10 billion to $15 billion per year from operations and a portfolio of good products that treat several illnesses. Research and innovation are cornerstones of AbbVie’s business as the company invests a lot of cash into these areas every year. In 2017, AbbVie recorded $5 billion in research and development expenses, which was nearly 30% of its total operating expenses.
The company operates under five business segments, which are immunology, oncology, neuroscience, virology and general medicine.
Humira, the trade name under which AbbVie sells adalimumab, a biosimilar product for the treatment of rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn's disease and other illnesses, is the company’s top-selling drug as it contributs more than 60% of annual sale.Â
The other best-selling drugs are Viekira Pak and Imbruvica. The first is used to treat adult patients who are affected with chronic hepatitis C virus, while the second product is used as a therapy for patients who are affected with certain types of non-Hodgkin lymphoma.
The company closed 2017 with $28.216 billion in revenue, $5.952 billion in operating income and $5.309 billion in net income.
The chart below depicts the trend over the last five fiscal years of AbbVie’s revenue, operating and net income:
For fiscal 2018 and 2019, analysts are projecting revenues of $32.92 billion and $34.59 billion.
As of the most recent quarter, the company has total assets, liabilities and equity of $69.342 billion, $65.798 billion and $3.553 billion respectively.
The trailing 12 months operating cash flow allowed the company to pile up $9.47 billion in cash on hand. Total debt amounts to $37.87 billion. GuruFocus assigns a financial strength rating of 5 out of 10.
Valuation
For the 52 weeks through June 17, AbbVie's stock is up 40% and the share price is mimicking the 50 and 200-day simple moving average lines. The 100-day SMA line is above the current market valuation of $99.57 per share:
The current share price is 30.2% off the 52-week low of $69.38 and 26.4% below the 52-week high of $125.86.
AbbVie has a forward price-earnings ratio of 12.76 times versus an industry median of 20 times. For 2018 and 2019, analysts expect a net profit per share of $7.79 and $8.91.
When the forward price-earnings ratio is multiplied by average quarterly weighted earnings of $8.07 per share, it yields a value of $102.94 per diluted share.
Wall Street analysts are equally distributed for a buy-hold approach and the average share price is $113.86 per share.
The Peter Lynch chart indicates AbbVie is overvalued at the current market valuations:
In addition, the price-book ratio is 44.47 versus an industry median of 2.96, the price-sales ratio is 5.37 versus an industry median of 3.25 and the price-earnings ratio is 25.08 versus an industry median of 26.44 times.
Disclosure: I have no positions in AbbVie or any other security mentioned in this article.
