AmerisourceBergen is a bargain when you consider their growth and earnings.

AmerisourceBergen is a pharmaceutical company that was created after the merge of AmierSource and Bergen in 2001, the former being an American company and the later being a predominantly British company.  With the merge new markets were available to both companies using combined distribution.  Mostly, the merge has been a great success.  The company has had some earnings issues the past few years; they posted a modest earnings-per-share loss in 2014 of $0.62.  Outside of that their earnings revenue has been growing significantly.  

Published over a year ago
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Reviewed by Ellen Johnson

AmeriSourceBergen is a pharmaceutical company that merged together about a decade ago. Their numbers show a lot of potential with growth in earnings and revenue.  The company is well positioned to see more growth over the next several years and yet they are currently trading at bargain rates.  

Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include AmerisourceBergen income statement, its balance sheet, and the statement of cash flows. Potential AmerisourceBergen investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although AmerisourceBergen investors may use each financial statement separately, they are all related. The changes in AmerisourceBergen's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on AmerisourceBergen's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of AmerisourceBergen fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of AmerisourceBergen performance into the future periods or doing a reasonable stock valuation. The intrinsic value of AmerisourceBergen shares is the value that is considered the true value of the share. If the intrinsic value of AmerisourceBergen is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares AmerisourceBergen. Please read more on our fundamental analysis page.

And What about dividends?

A dividend is the distribution of a portion of AmerisourceBergen earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. AmerisourceBergen dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. AmerisourceBergen one year expected dividend income is about USD0.95 per share.
Investing in dividend-paying stocks, such as AmerisourceBergen is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in AmerisourceBergen must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for AmerisourceBergen. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

How important is AmerisourceBergen's Liquidity

AmerisourceBergen financial leverage refers to using borrowed capital as a funding source to finance AmerisourceBergen ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. AmerisourceBergen financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to AmerisourceBergen's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of AmerisourceBergen's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between AmerisourceBergen's total debt and its cash.

Breaking down AmerisourceBergen Further

AmerisourceBergen is a pharmaceutical company that was created after the merge of AmierSource and Bergen in 2001, the former being an American company and the later being a predominantly British company.  With the merge, new markets were available to both companies using combined distribution.  Mostly, the merge has been a great success.  The company has had some earnings issues the past few years; they posted a modest earnings-per-share loss in 2014 of $0.62.  Outside of that, their earnings revenue has been growing significantly.  Here is the company’s revenue, operating profit and earnings-per-share, respectively for the past several years:

2011:    $79,489.60 $1,298.50  $2.84

2012:    $87,959.20   $935.30   $1.88

2013:  $119,569.10   $784.50   $1.22

2014:  $135,961.80   $438.90  -$0.62

2015:  $146,849.70 $1,715.20   $6.73

I love that revenue.  A company can do a lot with that kind of revenue.  And, AmeriSource Bergen’s revenue has been increasing over the years at a fairly consists rate.  But, the earnings-per-share has been the real crux of the company.  This may very well have to do with the economics of the world in general.  You will remember that in the years that the company saw declines in their revenue, so did economic activity on a whole around the world; this is the period that a lot of central banks pushed heavily on quantitative easing.  

Given that, there is a lot of potential to see continued growth in revenue as well as improvements in their earnings per share.  In fact, a close look at the 2015 income shows that this improvement is already underway.  The company’s earnings of $6.73 is a stellar example of things to come with the company.  

At the same time, you can see that there was a dip in operating revenue despite increases in overall revenue in 2014.  The, despite a less than 10% increase in revenue for 2015 there was a multiplying of a factor of three in operating revenue.  That translated into a stellar return on income for that year.  

But, it is the earnings-per-share that really caught my eye; the company’s stock is trading at roughly $60 per share.  With that share price and the earnings, this stock is trading at below 10-times earnings.  That would mean that you could buy the stock at $60 per share and earn 10% on that investment in just one year, assuming all else equal.  Looking at the U.S. Government Treasury bond, it is yielding 2.35% currently.  You would be earning 4 times that amount versus the benchmark 10-year.  That makes a long term investment in this company an excellent opportunity.  

There are fundamentals along with this company that I really like.  Mainly, the Baby-Boomer generation is at that age where they will need a great deal of health care going forward.  That will translate into even more revenue for healthcare providers.  I have been extremely bullish on this industry for some time for those reasons, despite any attempts to reign in costs for these programs out of Washington D.C.  

The best part about this company is that it may very well be offering the chance to purchase the stock at a lower price than where it is currently.  The stock market is overbought.  And, this company will likely be coming down in price merely because of guilt-by-association. 

There are many factors that I like about this company.  The revenue is just the beginning.  The sector is another element that I am looking towards.  These factors are reasons that I am putting this stock into my own portfolio.  I am merely waiting for the stock to dip before I execute. 

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Editorial Staff

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