Ergomed demonstrated fast growth in recent years. Will the growth continue?
19 Apr 2016 • About Ergomed (
$ERGO) • By InTwits
Ergomed is a growth stock in Pharmaceuticals & Biotechnology industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Ergomed showed growth in the last financial year. The company's revenue surged on 42.7% in FY2015. EBITDA also increased considerably: 65.1% for the same period.
In the longer period the company showed fast revenue growth of 27.4% from 2012 to 2015 annually. EBITDA surged on 79.1% from 2012 to 2015 annually.
Ergomed ($ERGO) financials for the last 5 years
| mln. £ | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 12 | 15 | 15 | 21 | 30 |
|---|
| Revenue growth, % | | 21.1% | 3.7% | 39.7% | 42.7% |
|---|
| Gross margin, % | 32.8% | 26.9% | 33.0% | 27.3% | 27.7% |
|---|
| SG&A, % | 27.3% | 23.4% | 21.4% | 17.4% | 17.2% |
|---|
| EBITDA | 1 | 1 | 2 | 2 | 3 |
|---|
| EBITDA growth, % | | -18.9% | 238.4% | 2.9% | 65.1% |
|---|
| EBITDA margin, % | 5.51% | 3.69% | 12.0% | 8.87% | 10.3% |
|---|
| Net Income | 1 | 0 | 2 | 1 | 2 |
|---|
| Net Income margin, % | 4.43% | 2.68% | 10.2% | 2.73% | 5.14% |
|---|
| |
| CAPEX | 0 | 0 | 0 | 0 | 0 |
|---|
| CAPEX/Revenue, % | 0.390% | 0.657% | 0.462% | 0.293% | 0.895% |
|---|
| Debt | 0 | 0 | 0 | 0 | 0 |
|---|
| Cash | 1 | 0 | 2 | 5 | 4 |
|---|
| Net Debt/EBITDA | -1.0x | -0.6x | -1.0x | -2.4x | -1.3x |
|---|
| |
| ROIC, % | | 82.0% | 148.0% | 15.5% | 14.6% |
|---|
| ROE, % | | 71.1% | 136.8% | 6.7% | 9.6% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. EBITDA margin surged on 1.40 pp from 8.90% to 10.3% in 2015. In the last 3 years EBITDA margin surged on 6.60 pp from 3.70% in 2012 to 10.3% in 2015.
We call Ergomed an attractive growth stock as together with the growth it delivers high ROIC at 14.6%. During the last three years it dropped - it was 82.0% in FY2012. Average ROIC for the last three years was 59.4%.
The company's Net Income margin surged on 2.40 pp from 2.70% to 5.10% in 2015. In the longer period the company's Net Income margin surged on 2.40 pp from 2.70% in 2012 to 5.10% in 2015.
Ergomed operates at ROE of 9.62%. For the last three years the average ROE was 51.0%.
Capital expenditures (CAPEX)
Ergomed's CAPEX/Revenue was 0.895% in FY2015. Ergomed showed fast CAPEX/Revenue growth of 0.238 pp from 0.657% in 2012 to 0.895% in 2015. For the last three years the average CAPEX/Revenue was 0.550%.
Leverage (Debt)
Having such a fast growth profile Ergomed keeps negative net debt at -1.3x Net Debt/EBITDA. In the last 3 years leverage surged on 0.64x from -0.63x in 2012 to -1.28x in 2015.
Valuation vs. comparable companies
The company trades at 12.7x EV/EBITDA which is 8.87% lower than 13.9x Pharmaceuticals & Biotechnology industry avearge calculated based on 66 companies. The market closed today at 27.9x P/E for Ergomed which is 39.2% lower than 45.8x Pharmaceuticals & Biotechnology peer group avearge calculated on the basis of 7 companies.
Peers in Pharmaceuticals & Biotechnology
Below you can find Ergomed benchmarking vs. other companies in Pharmaceuticals & Biotechnology industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Cathay International Hldgs Ltd ($CTI) | | 19.6% | 5.1% | 30.6% | -19.4% |
| Source Bioscience ($SBS) | | 8.2% | 18.8% | 28.9% | 4.5% |
| Cyprotex ($CRX) | | 5.3% | 17.3% | 18.5% | 34.9% |
| Beximco Pharmaceuticals ($BXP) | 21.6% | 17.7% | 12.9% | 6.8% | |
| Animalcare Group ($ANCR) | | -8.2% | 11.6% | 6.3% | 5.1% |
| |
|---|
| Median (10 companies) | 43.7% | 6.7% | 12.0% | 1.9% | -0.3% |
|---|
| Ergomed ($ERGO) | | 21.1% | 3.7% | 39.7% | 42.7% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Pfizer Inc ($PFZ) | 78.4% | 82.0% | 81.4% | 80.7% | 80.3% |
| Cyprotex ($CRX) | 83.2% | 81.9% | 80.0% | 75.0% | 77.3% |
| Animalcare Group ($ANCR) | 54.0% | 54.0% | 56.0% | 55.4% | 55.9% |
| Source Bioscience ($SBS) | 44.4% | 45.1% | 46.0% | 48.6% | 50.5% |
| Cathay International Hldgs Ltd ($CTI) | 51.2% | 52.2% | 49.1% | 47.1% | 41.1% |
| |
|---|
| Median (10 companies) | 46.2% | 46.2% | 46.1% | 46.3% | 50.5% |
|---|
| Ergomed ($ERGO) | 32.8% | 26.9% | 33.0% | 27.3% | 27.7% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Pfizer Inc ($PFZ) | 36.3% | 41.9% | 41.9% | 37.9% | 34.8% |
| Pharmstandard OJSC ($PHST) | 28.1% | 26.1% | 30.3% | 30.9% | |
| Beximco Pharmaceuticals ($BXP) | 30.5% | 29.1% | 26.9% | 27.2% | |
| Animalcare Group ($ANCR) | 29.9% | 24.2% | 25.2% | 24.5% | 25.4% |
| Source Bioscience ($SBS) | -6.8% | 16.1% | 16.7% | 20.1% | 20.5% |
| |
|---|
| Median (10 companies) | 19.0% | 18.7% | 16.2% | 19.3% | 20.5% |
|---|
| Ergomed ($ERGO) | 5.5% | 3.7% | 12.0% | 8.9% | 10.3% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Beximco Pharmaceuticals ($BXP) | 14.1% | 11.1% | 26.1% | 24.8% | |
| Cyprotex ($CRX) | 4.0% | 3.5% | 12.0% | 12.9% | 5.3% |
| Eastpharma Ltd ($EAST) | 9.5% | 11.9% | 12.3% | 7.1% | 6.2% |
| Pharmstandard OJSC ($PHST) | 4.1% | 2.7% | 2.6% | 5.8% | |
| Source Bioscience ($SBS) | 46.3% | 13.7% | 7.9% | 5.3% | 5.3% |
| |
|---|
| Median (10 companies) | 4.0% | 3.1% | 5.5% | 4.7% | 5.3% |
|---|
| Ergomed ($ERGO) | 0.4% | 0.7% | 0.5% | 0.3% | 0.9% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Pharmstandard OJSC ($PHST) | 37.1% | 34.0% | 42.6% | 28.8% | |
| Animalcare Group ($ANCR) | 18.1% | 14.0% | 15.4% | 14.2% | 14.8% |
| Anpario ($ANP) | 11.9% | 15.9% | 14.7% | 13.6% | 13.8% |
| Pfizer Inc ($PFZ) | 10.8% | 11.6% | 10.9% | 9.9% | 9.1% |
| Beximco Pharmaceuticals ($BXP) | 9.4% | 9.7% | 8.9% | 8.7% | |
| |
|---|
| Median (10 companies) | 9.6% | 8.4% | 8.7% | 8.5% | 9.1% |
|---|
| Ergomed ($ERGO) | | 82.0% | 148.0% | 15.5% | 14.6% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Cyprotex ($CRX) | -0.2x | 0.6x | -4.3x | 20.0x | 3.9x |
| Cathay International Hldgs Ltd ($CTI) | 8.2x | 15.0x | 12.2x | 6.3x | 12.7x |
| Eastpharma Ltd ($EAST) | 15.6x | 2.7x | 3.8x | 4.3x | 2.7x |
| Pfizer Inc ($PFZ) | 1.5x | 1.2x | 1.6x | 1.8x | 2.1x |
| Beximco Pharmaceuticals ($BXP) | 0.6x | 1.1x | 1.5x | 1.5x | |
| |
|---|
| Median (10 companies) | -0.2x | 0.5x | 0.5x | 1.2x | 2.1x |
|---|
| Ergomed ($ERGO) | -1.0x | -0.6x | -1.0x | -2.4x | -1.3x |
