Strong Cash Yield: Is Regeneron Pharmaceuticals Stock A Buy?
Regeneron Pharmaceuticals (REGN) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market
REGN Has Good Fundamentals
- Good Cash Yield: Not many stocks offer free cash flow yield of 5.3%, but Regeneron Pharmaceuticals stock does
- Strong Margin: Last 12 month operating margin of 25.8%
- Growth: Last 12 revenue growth of 5.9% – low growth, but this selection is all about high yield and margin
- Valuation: REGN stock currently trading at 43% below 2Y high, 12% below 1M high, and at a PS lower than 3Y average.
Below is a quick comparison of REGN fundamentals with S&P medians.
| REGN | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Biotechnology | – |
| Free Cash Flow Yield | 5.3% | 4.4% |
| Revenue Growth LTM | 5.9% | 6.8% |
| Revenue Growth 3YAVG | 6.4% | 5.5% |
| Operating Margin LTM | 25.8% | 18.6% |
| Operating Margin 3YAVG | 28.1% | 18.2% |
| PE Ratio | 16.1 | 23.9 |
*LTM: Last Twelve Months
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But What Is The Risk Involved?
While REGN stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Regeneron fell 69% during the Dot-Com crash and nearly 58% in the Global Financial Crisis. The 2018 correction hit it almost 48%, while the Covid dip and Inflation shock saw drops around 27% and 26% respectively. Even with strong fundamentals, REGN shows how tough market sell-offs can be. When the market turns, sharp drops happen across the board, no matter how solid the stock looks. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read REGN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
For more details and our view, see Buy or Sell REGN Stock.
Stocks Like REGN
Not ready to act on REGN? Consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Dipped last month & meaningfully below 2Y high
- Current P/S < last few year average
- Strong operating margin with no instances of large margin collapse
- High free cash flow yield
A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:
- Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Strategy consistent across market cycles
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