Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, generic-drug giant Teva Pharmaceutical Industries
With that in mind, let's take a closer look at Teva's business and see what CAPS investors are saying about the stock right now.
Teva facts
| Headquarters (Founded) | Petach Tikva, Israel (1901) |
| Market Cap | $44.0 billion |
| Industry | Pharmaceuticals |
| Trailing-12-Month Revenue | $16.55 billion |
| Management |
CEO Shlomo Yanai (since 2007) CFO Eyal Desheh (since 2008) |
| Return on Equity (Average, Past 3 Years) | 11.5% |
| Cash/Debt | $748 million / $6.75 billion |
| Dividend Yield | 1.9% |
| Competitors |
Novartis Pfizer Merck |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 97% of the 2,300 members who have rated Teva believe the stock will outperform the S&P 500 going forward. These bulls include fellow Fool Sean Williams (TMFUltraLong) and SpinningFree, both of whom are ranked in the top 10% of our community.
A few months ago, Sean touched on several of Teva's positives:
Teva has more than 1250 generic drugs it manufactures throughout the world and has more than 3500 applications currently pending in Europe alone. On top of that it has developed a few of its own drugs, Copaxone and Azilect. The company generated $3.4 billion in free cash flow last year. ... It has a double-digit growth rate ... and is a high-margin machine. Best pharmaceutical company hands down.
Over the next five years, in fact, Teva is expected to grow its bottom line at a solid rate of nearly 11% annually. That's faster than main generic rival Novartis (5%), as well as big pharma foes like Pfizer (3%) and Merck (4%).
CAPS All-Star SpinningFree expands on the Teva outperform argument:
A very strong, competitive player in an ever-growing segment of pharmaceuticals, generic drugs. Time and time again we've seen that when a prescription drug loses its patent and exclusive rights to sell, generics swoop in. ...
Generally, the trend is a strong switch to Generic brands (and unless there's a switch to over the counter, usually the market is relatively static after that -- which is good for repeat business), and Teva has a strong track record of bringing generic drugs out to market with the necessary scale to keep business coming in by competing on price. I'd argue that the stock is undervalued as well, as the recent slip in price is in response to one drug faltering. Check out their pipeline of generics and see for yourself, but I'd argue that this company is well poised for long term growth -- through both its generic pipeline and its balance sheet.
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