Quintiles IMS Holdings, Inc. – Value Analysis (NYSE:Q) : December 23, 2016

Capitalcube gives Quintiles IMS Holdings, Inc. a score of 72.

Our analysis is based on comparing Quintiles IMS Holdings, Inc. with the following peers – ICON Plc, Charles River Laboratories International, Inc., Bioanalytical Systems, Inc., PAREXEL International Corporation, Interpace Diagnostics Group, Inc., Thermo Fisher Scientific Inc. and SCYNEXIS, Inc. (ICLR-US, CRL-US, BASI-US, PRXL-US, IDXG-US, TMO-US and SCYX-US).

Investment Outlook

Quintiles IMS Holdings, Inc. has a fundamental score of 72 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • Quintiles IMS Holdings, Inc. currently has a negative book value but trades at a higher Price/Asset ratio (4.47) than its peer median (1.32).
  • Q-US‘s book value of equity is not positive and suggests that that it is not meaningful to analyze its ROE versus P/E in order to determine whether the company has an operating or growth advantage.
  • Q-US‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • Q-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While Q-US‘s revenues growth has been around the peer median in recent years, the market seems to see faster growth ahead and gives its shares a higher than peer median P/E ratio.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • Q-US has additional debt capacity.

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Leverage & Liquidity

Q-US has additional debt capacity.

  • With debt at a reasonable 21.96% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 24.24%), and a well-cushioned interest coverage level of 8.36x, Q-US has the capacity to borrow some more.
  • All 7 peers for the company have an outstanding debt balance.

Q-US has maintained its relatively high liquidity profile from the recent year-end.

  • Q-US‘s interest coverage is its highest relative to the last five years and compares to a low of 3.09x in 2012.
  • While its interest coverage increased to 8.36x from 7.67x (in 2015), its peer median decreased during this period to 8.90x from 11.07x.
  • Interest coverage rose 2.86 points relative to peers.
  • Q-US‘s debt-EV is its lowest relative to the last five years and compares to a high of 28.13% in 2013.
  • While its debt-EV decreased to 21.96% from 24.89% (in 2015), its peer median increased during this period to 24.24% from 18.71%.
  • Relative to peers, debt-EV fell 8.48 percentage points (and is now lower than its peer median).

Access the detailed analysis for Quintiles IMS Holdings, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
ICON Plc 9.09 2.2 26 93.62
Charles River Laboratories International, Inc. 24.78 1.59 9.45 23.4
Bioanalytical Systems, Inc. 36.29 0.46 -6.36 -5.83
PAREXEL International Corporation 13.36 1.65 28.51 60.79
Interpace Diagnostics Group, Inc. 88.15 0.34 -7.82 46.82
Thermo Fisher Scientific Inc. 23.71 1.56 6.23 18.97
SCYNEXIS, Inc. 26.99 13.42 No interest exp -410.28
Quintiles IMS Holdings, Inc. 21.96 1.63 8.36 24.96
Peer Median 24.24 1.61 8.9 24.18
Best In Class 9.09 13.42 No interest exp 93.62

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Company Profile

Quintiles IMS Holdings, Inc. is a biotechnology company, which engages in healthcare development in the provision of professional services, information technology, and partnering solutions to the pharmaceutical services and healthcare industries. The company was founded by Dennis Gillings and Gary Koch in 1982 and is headquartered in Durham, NC.

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