Numbers Analysis: Novozymes B (NZYM B)

Novozymes is the world leader in industrial enzymes. In recent years, the company has expanded into micro-organisms, primarily for agricultural markets. The firm supplies five major industry groups: household care, food and beverages, bioenergy, agriculture and feed, and technical and pharma. It’s biological solutions create value for its customers by improving yield efficiency and performance while saving energy and generating less waste. The company is headquartered in Denmark.

Charts:

Price in USD

Statistics

Year20102011201220132014
ROIC22.2%21.3%19.9%20.0%23.1%
Sales (MDKK)972410510112341174612459
EPS (DKK)5.055.716.336.938.02
Equity (MDKK)7836882495681106611280
Free cash flow (MDKK)975-3384911764215
P/En/an/an/an/an/a
Year20152016201720182019
ROIC25.9%25.1%25.6%24.2%21.1%
Sales (MDKK)1400214142145311439014373
EPS (DKK)9.1210.0610.4911.0311.01
Equity (MDKK)1159311745112671143811480
Free cash flow (MDKK)20822491239522872635
P/E36.2124.2333.7926.429.61

Growth Rates

Yearly average10 year5 year1 year
ROIC23%24%21%
Sales Growth Rate4%1%0%
EPS Growth Rate9%5%0%
Equity Growth Rate4%0%0%
Cash Flow Growth Rate12%6%15%

Calculations using historic growth rates and different P/E

Growth rates x 2Average P/EMedian P/E
P/E8.0030.0529.61
Calculated future price in 10 years130490483
Calculated Price33122121
Margin of Safety (50%)166160
In Danish Krone (DKK)

Current price: 387.50 DKK

I’ve been looking at Novozymes because I’m interested in trading the stock (on the long side).

The numbers look pretty good except that 2019 has been stagnant. There is 0% growth in Sales, EPS and Equity. The calculations suggest that Novozymes is overvalued.

To be considered for further analysis, as a growth stock, the requirement is that the 10 year yearly average growth rate is at least 5% in all five categories. They are not.

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