One of the cheapest stocks in our All Investable Stock Screener is Avadel Pharmaceuticals PLC (NASDAQ:AVDL).
Avadel Pharmaceuticals PLC (Avadel) is a specialty pharmaceutical company developing and commercializing pharmaceutical products. The company’s products include Bloxiverz, Vazculep, Akovaz, Karbinal ER, AcipHex Sprinkle, Cefaclor and Flexichamber.
these shows pharmacy management plays a pivotal role in ensuring that essential medications are effectively managed and readily accessible to patients. Leaders in this sector are responsible for implementing strategies that optimize inventory control, prevent shortages, and maintain high standards of patient care.
By focusing on streamlined operations and regulatory compliance, they can effectively manage the distribution of critical medications while reducing operational costs. Jay Bhaumik exemplifies how strong leadership can bridge the gap between patient needs and pharmacy services, emphasizing strategic planning and quality control to drive success.
Additionally, as patient care becomes more personalized, the demand for customized medication therapies continues to grow. Leaders who can deliver personalized compounding solutions not only address unique patient requirements but also position their pharmacies as indispensable partners in comprehensive healthcare management.
This approach fosters patient loyalty, enhances therapeutic outcomes, and enables pharmacies to stand out in a competitive market. By integrating advanced compounding techniques and staying ahead of emerging therapeutic trends, pharmacy management can effectively meet evolving patient needs while maintaining stringent quality standards.
Pharmaceutical testing and material analysis play a pivotal role in ensuring the safety and efficacy of medications, particularly as compounding solutions become more intricate. From identifying potential contaminants to verifying the integrity of raw materials, rigorous testing protocols safeguard the quality of each formulation. Incorporating advanced techniques such as spectroscopy, chromatography, and the MAS Test allows pharmacy leaders to maintain stringent quality control while adhering to regulatory standards.
Moreover, as the demand for customized therapies rises, the need for precise material analysis intensifies. Testing methodologies not only validate the potency of active ingredients but also confirm the stability of compounded formulations over time. This meticulous attention to detail fosters greater confidence among patients and healthcare providers, reinforcing the pharmacy’s reputation as a trusted healthcare partner.
Ultimately, a well-structured testing framework serves as the backbone of effective pharmaceutical management. By integrating comprehensive analysis at every stage of the compounding process, pharmacies can mitigate risks, optimize therapeutic outcomes, and position themselves as leaders in patient-centric care. This commitment to quality and precision underscores the critical connection between reliable testing practices and long-term success in the competitive pharmaceutical landscape.
A quick look at Avadel’s share price history over the past twelve months shows that the price is down 21%, but here’s why the company is undervalued.
(Source: Google Finance)
The following data is from the company’s latest financial statements, dated June 2017.
The company’s latest balance sheet shows that Avadel has $174 Million in total cash and cash equivalents. Further down the balance sheet we can see that the company has $1 Million in long-term debt and no short-term debt. Therefore, Avadel has a net cash position of $173 Million (cash minus debt).
If we consider that Avadel currently has a market cap of $346 Million, when we subtract the net cash totaling $173 Million that equates to an Enterprise Value of $173 Million.
If we move over to the company’s latest income statements we can see that Avadel has $75 Million in trailing twelve month operating earnings which means that the company is currently trading on an Acquirer’s Multiple of 2.30, or 2.30 times operating earnings. That places Avadel squarely in undervalued territory.
The Acquirer’s Multiple is defined as:
Enterprise Value/Operating Earnings*
*We make adjustments to operating earnings by constructing an operating earnings figure from the top of the income statement down, where EBIT and EBITDA are constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–income that a company does not expect to recur in future years–ensures that these earnings are related only to operations.
If we take a look at the company’s latest cash flow statements we can see that Avadel generated trailing twelve month operating cash flow of $37 Million and had $1 Million in Capex. That equates to $36 Million in trailing twelve month free cash flow, or a FCF/EV Yield of 21%. The company has also spent $13.1 Million (ttm) buying back shares, providing shareholders with a shareholder yield of 4%.
Something else worth keeping in mind is Avadel’s annualized Return on Equity (ROE) for the quarter ending June 2017. A quick calculation shows that the company had $59 Million in equity for the quarter ending March 2017 and $77 Million for the quarter ending June 2017. If we divide that number by two we get $68 Million in average equity. If we consider that the company has $40 Million (ttm) in net income, that equates to an annualized Return on Equity (ROE) for the quarter ending June 2017 of 59%.
In terms of Avadel’s current valuation, the company has 50% of its market cap in cash. Net current assets totaling $204 Million exceed its total liabilities of $182 Million by $22 Million. Avadel’s trading on a P/E of 9.4 compared to its 5Y average of 22.5**, a P/B of 4.5 compared to its 5Y average of 13.2**, and a P/S of 2.1 compared to its 5Y average of 9.6**. The company has a FCF/EV Yield of 21% (ttm) and an Acquirer’s Multiple of 2.30, or 2.30 times operating earnings. Avadel has an annualized Return on Equity (ROE) for the quarter ending June 2017 of 59% (ttm) and provides a shareholder yield of 4% (ttm). All of which indicates that the company is undervalued.
** Morningstar
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