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Teva Pharmaceutical Industries Q3 Earnings: Is NYSE:TEVA Expensive at 2,401.1x Price/EPS?

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Teva Pharmaceutical Industries Limited (NYSE:TEVA) is scheduled to report Q3 earnings results on November 5, 2020.

The company is expected to report earnings of $0.58/share on revenue of $4.086 billion. The consensus earnings per share (EPS) of $0.58/share is based on a poll of 20 analysts and represents a decline in eps of −0.6% over the same quarter last year, when the company reported earnings of $0.58/share.

The revenue forecast of $4.086 billion based on a poll of 17 analysts implies a year-over-year (YoY) decline in revenue of −4.2%. Last year the company reported $4.264 billion in revenue for the quarter.

Expected to report EPS contraction of −0.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $4,085.53 $4,264.00 −4.2%
EPS $0.58 $0.58 −0.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Teva Pharmaceutical Industries Limited for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.53 $0.55 4.0% Beat
Q1, 2020 $0.59 $0.76 27.8% Beat
Q4, 2019 $0.61 $0.62 2.1% Beat
Q3, 2019 $0.59 $0.58 −2.0% Missed
Q2, 2019 $0.58 $0.60 4.3% Beat
Q1, 2019 $0.58 $0.60 3.7% Beat
Q4, 2018 $0.55 $0.53 −2.8% Missed
Q3, 2018 $0.54 $0.68 25.9% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 3.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $11.80 $12.15 3.0% Increase
May 7, 2020 $10.48 $11.29 7.7% Increase
February 12, 2020 $12.33 $12.57 1.9% Increase
November 7, 2019 $8.10 $9.30 14.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.69, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.69 implies a 0.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

Teva Pharmaceutical Industries Limited is currently trading at $8.79/share, up 0.5% for the day. The company is trading at approximately 64.2% of its 52-week high of $13.76/share. The company’s stock price is down −27.7% since the last earnings report and down −7.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 38.67 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:TEVA Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 2,401.12 and a forward P/E multiple of 3.64.

Teva Pharmaceutical Industries Limited’s current share price also implies a price-to-book (P/B) multiple of 0.69. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $8.79
P/E Ratio 2,401.1x
P/E Ratio (Fwd) 3.6x
PEG Ratio 23.9
Total Debt / Total Capital 71.7%
Levered Free Cash Flow $894 million
EV / EBITDA 7.5x

Finbox

Teva Pharmaceutical Industries Limited is a mid-cap stock with a market capitalization of $9.577 billion and a total enterprise value of $34.826 billion. The company operates in the Healthcare sector and the Pharmaceuticals industry.

Teva Pharmaceutical Industries Limited, a pharmaceutical company, develops, manufactures, markets, and distributes generic medicines, specialty medicines, and biopharmaceutical products in North America, Europe, and internationally. The company offers sterile products, hormones, high-potency drugs, and cytotoxic substances in various dosage forms, including tablets, capsules, injectables, inhalants, liquids, ointments, and creams. It also develops, manufactures, and sells active pharmaceutical ingredients. In addition, the company provides specialty medicines for use in central nervous system and respiratory indications. Further, its products in the central nervous system and pain area comprise Copaxone for the treatment of relapsing forms of MS; AJOVY for the preventive treatment of migraine; and AUSTEDO for the treatment of tardive dyskinesia and chorea associated with Huntington disease. Additionally, the company’s products in the respiratory market include ProAir, ProAir Respiclick, QVAR, Duoresp Spiromax, Braltus, Cinqair/Cinqaero, and AirDuo RespiClick/ArmonAir RespiClick/AirDuo Digihaler for the treatment of asthma and chronic obstructive pulmonary disease, as well as Bendeka, Treanda, Granix, Trisenox, Lonquex, and Tevagrastim/Ratiograstim products in the oncology market. It has collaboration arrangements with Otsuka Pharmaceutical Co. Ltd. and Regeneron Pharmaceuticals, Inc. Teva Pharmaceutical Industries Limited was founded in 1901 and is headquartered in Petach Tikva, Israel.

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