Diplomat Pharmacy, Inc. – Value Analysis (NYSE:DPLO) : January 18, 2017

Capitalcube gives Diplomat Pharmacy, Inc. a score of 59.

Our analysis is based on comparing Diplomat Pharmacy, Inc. with the following peers – Aceto Corporation, McKesson Corporation, AmerisourceBergen Corporation and Cardinal Health, Inc. (ACET-US, MCK-US, ABC-US and CAH-US).

Investment Outlook

Diplomat Pharmacy, Inc. has a fundamental score of 59 and has a relative valuation of NEUTRAL.

Fundamental Score

Access our research and ratings on Diplomat Pharmacy, Inc.

Company Overview

  • From a peer analysis angle, relative underperformance over the last year has improved more recently.
  • Diplomat Pharmacy, Inc. trades at a lower Price/Book multiple (1.50) than its peer median (3.06).
  • The market expects faster earnings growth from DPLO-US than from its peers and also a turnaround in its current ROE.
  • DPLO-US has relatively low profit margins and median asset efficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • DPLO-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • Company appears to give away relatively high gross margins to relatively high operating costs suggesting a differentiated product portfolio with low pre-tax margins relative to peers.
  • Compared with the peers chosen, DPLO-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.
  • DPLO-US has the financial and operating capacity to borrow quickly.

Access our research and ratings on Diplomat Pharmacy, Inc.

Leverage & Liquidity

DPLO-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 7.70% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 19.39%), and a well-cushioned interest coverage level of 9.81x, DPLO-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 4 peers for the company have an outstanding debt balance.

DPLO-US has maintained its Quick & Able profile from the recent year-end.

  • DPLO-US‘s interest coverage is greater than (but within one standard deviation of) its five-year average interest coverage of 8.24x.
  • Though its interest coverage decreased to 9.81x from 10.48x (in 2015), its peer median remained relatively stable during this period at 11.10x.
  • Interest coverage fell 0.68 points relative to peers.
  • DPLO-US‘s debt-EV continues to trend upward but is still over one standard deviation below its five-year average debt-EV of 72.20%.
  • Though its debt-EV increased to 7.70% from 5.08% (in 2015), its peer median remained relatively stable during this period at 19.39%.
  • Relative to peers, debt-EV rose 2.70 percentage points.

Access the detailed analysis for Diplomat Pharmacy, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Aceto Corporation 19.52 3.82 6.6 44.79
McKesson Corporation 19.37 1.12 11.1 43.47
AmerisourceBergen Corporation 22.99 0.9 11.33 53.93
Cardinal Health, Inc. 19.39 1.11 12.31 41.5
Diplomat Pharmacy, Inc. 7.7 1.31 9.81 62.9
Peer Median 19.39 1.12 11.1 44.79
Best In Class 7.7 3.82 12.31 62.9

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Company Profile

Diplomat Pharmacy, Inc. operates as an independent specialty pharmacy in the United States. The firm stocks, dispenses, and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. It focuses on improving the lives of patients with complex chronic diseases. The company was founded by Dale Hagerman and Phil Hagerman in 1975 and is headquartered in Flint, MI.

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