Sanofi in bottom 2% performers of CAC 40 Index 09 October 2019

NEWS BITES - EUROPE

Sanofi (FR:SAN), France's largest Pharmaceuticals & biotechnology company by market cap, has decreased 29.0c (0.4%) from its previous trading session to close at EUR81.85. This makes Sanofi's stock the second lowest performer in the CAC 40 Index of 39 stocks which was up 0.8% on Wednesday. This also indicates a relative price change of -1.1%. The volume was 0.7 times the average daily trading volume of 2.5 million shares. There were 1,670,000 shares worth EUR136.7 million (US$149.8 million) traded today.

Stock Summary

CurrencyEuro (EUR) 1 EUR = 1.1 USD
Today's close (EUR)81.85
52-Week Range (EUR)69.2-85.9
SectorPharmaceuticals & Biotechnology sector
Shares Outstanding1,252,019,921
Market CapEUR102.5 billion (US$112.3 billion)

Highlights in today's Report:

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

SECTION 2 TODAY'S BEARISH SIGNALS

SECTION 3 TODAY'S BULLISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF EUR81.85):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

[Volume Index or VI in brackets; 1 is average]

+ Paris: SAN.FR 1,670,000 [VI of 0.7] volume 99.66% of aggregate. Price: EUR81.85.

+ Xetra: SNW.ETR 5,120 [VI of 0.7] volume 0.31% of aggregate. Price: EUR82.19.

+ Aggregate volume: there were 1.7 million shares of Sanofi worth EUR137.2 million traded today. The aggregate volume was 0.7 times average trading of 2.5 million shares.

SECTION 2 SANOFI BEARISH SIGNALS

2.1 Overvaluation Indicator and rank of Sanofi in the French market:

DescriptionValueRank In Market
Price to Sales2.9In Bottom Quartile

2.2 Downtrend:

Today's Volatility:

+ Sanofi drops on high volatility: Today its volatility (highest price minus lowest price/lowest price) of 1.4% was 0.7 times the average daily volatility of 2.0%, up from 0.8% on Tuesday and 1.0% on Monday.

SECTION 3 SANOFI BULLISH SIGNALS

3.1 Undervaluation [compared with sector average]:

Price/Earnings and Earnings Yield

+ Price/Earnings of 16.4 [24.8]. We estimate Sanofi stock is trading at a current year P/E of 20.7 and a forward year P/E of 18. The P/E of 16.4 plus annual inflation in the France of 0.9% adds up to 17.3, well within the value benchmark Rule of 19.

+ Earnings yield of 6.1% is 436.4 times the 10-year bond yield of 0.01%.

Dividend Yield

+ The relative yield of SAN, defined by its yield of 3.8%, divided by average yield of dividend yielding stocks in the CAC 40 Index of 3.2% is 118.3%. This suggests Sanofi stock is undervalued in dividend yield terms.

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.9. Compared with the rest of the market the stock is undervalued.

3.2 Undervaluation Indicator and rank of Sanofi in the French market:

DescriptionValueRank In Market
* EV/EBITDA19.4In Top Quartile

* Enterprise value of EUR127.3 billion is divided by Earnings before interest tax depreciation and amortization of EUR6.6 billion.

3.3 Uptrend:

Price/Moving Average Price and MACD:

+ The Price/MAP of 1.09 for SAN is higher than the Price/MAP for the CAC 40 Index of 1.03.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 82.37 minus the 26-day EMA of 81.56 is positive suggesting a bullish signal.

+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. In the past 50 days this ratio has exceeded 1.0, 28 times suggesting further upside. The 50-day EMAP has increased to EUR80.02. An increase is another bullish indicator.

+ The price to 200-day MAP ratio is 1.09, a bullish indicator. In the past 200 days this ratio has exceeded 1.09 11 times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of EUR79.06 is higher than the 200-day MAP of EUR75.11, a bullish indicator. The 200-day MAP has increased to EUR75.11. An increase is another bullish indicator.

Past Week:

+ Sanofi is placed 128/556 in BuySellSignals' ranking of French performers in the past week, a percentile ranking of 77.

+ In the past week, volume was 0.8 times average and the shares were up 1.5%.

Past Month:

+ The price lifted 3.3% in the past month. The rise was on volume of 1.1 times average for month.

+ In the past three months the stock has hit a new 52-week high eight times, pointing to a significant uptrend.

+ The present value of EUR1,000 (PV1000) invested one month ago in Sanofi is EUR1,033, for a capital gain of EUR33.

PV10001-week1-month1-year
SAN.FR1,0151,0331,175
CAC 40 Index1,0149781,034

Relative Strength (6 months):

+ In the French market of 573 stocks traded today, the stock has a 6-month relative strength of 78 indicating it has outperformed 78% of the market.

3.4 High Price Performance Indicators and rank of Sanofi in the French market:

DescriptionSAN ValueRank In Market
Today's Trading TurnoverEUR136.7 million (US$149.8 million)In Top 2%
MCapEUR102.5 billionIn Top 2%
Price/MAP501.04In Top Quartile
Price/MAP2001.09In Top Quartile

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF EUR81.85):

SECTION 4 THE PAST WEEK

4.1 Snapshot: Sanofi stock was up EUR1.18 or 1.5% in the past week. Volume in the week was 0.8 times average trading of 12.4 million shares. It outperformed the CAC 40 index in 3 out of 5 days.

DaySanofiClose price [EUR]Price change %Relative change %Comment
TuesdayDecreases82.14-0.21.0Price fall on slipping relative strength
MondayInches higher, resistance at 12-day EMA82.30.1-0.5Price/MAP50 above 1 and rising
FridayInches higher, resistance at 12-day EMA82.21.21.1Top Rise
ThursdayIncreases on average volume81.20.70.4Price/MAP50 above 1 and rising
WednesdayDrops 3.5%80.67-3.5-0.3Steepest Fall; VI*=1.4

[Volume Index (VI); 1 is average]

4.2 Volatility:

+ Sanofi is at a discount of 4.7% to its 12-month high of EUR85.90 on September 26. It is also at a premium of 18.3% to the 12-month low of EUR69.18 on February 14.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Low Debt Indicators:

+ The debt to equity ratio of 41.9% is under a safe benchmark figure of 50%. However, it has deteriorated from 26.9% a year ago.

5.2 Past 5 years Annual EPS growth:

Annual ReportEPS (EUR)Growth %
20185.025.0
20174.0-1.3
20164.0524.7
20153.25-1.5
20143.319.1

Average Annual Compounded rate of growth in EPS for the 5 years was impressive at 12.5%. There have been three rises and two declines in the past 5 years.

5.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 8.1%. The Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in SAN would have produced a return of 17.1%.

SANClose (EUR)Dividends (EUR)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 0981.853.0712.84.217.1
1 Yr ago72.553.03(8.2)3.8(4.3)
2 Yrs ago792.9629.54.934.4
3 Yrs ago612.93(20.1)3.8(16.3)
4 Yrs ago76.342.855.63.99.5

Close 5 years ago EUR72.29

5.4 Increased VWAP

Past five years, 12 months ended Oct 09 (EUR)

YearHigh PriceVWAPLow Price
201985.975.0669.18
201878.6166.0857.59
201783.2672.2659.6
201683.1966.3955.42
201589.6474.6559.94

In the past five years Volume Weighted Average Price (VWAP) has increased by 0.6% to EUR75.06. Based on a dynamic start date of five years ago, there have been declines in VWAP in 3 out of 5 years.

5.5 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 47.8% (or a turnover period of 2 years 33 days). The average length of ownership of the stock is 1.1 times the average holding period of 1 year 10 months for stocks in the CAC 40 Index.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 Performance:

+ Return on Equity 6.7% [7.3%].

+ Return on Assets 3.5% [3.9%].

+ Return on Capital Employed 4.7% [4.9%].

+ Net profit margin has averaged 11.4% in the last 3 years. This is lower than the sector average of 15.9% and suggests a low margin of safety.

+ As per the Du Pont analysis, Return on Equity [ROE] is less than stellar at 6.7%; a deterioration from 7.7% last year. ROE is computed as net profit margin of 11.0% times asset turnover [sales/assets] of 0.32 times leverage factor [total assets/shareholders' equity] of 1.9.

YOY Deterioration in ROE and Profit Margin

Du Pont AnalysisROEProfit MarginAsset TurnoverEquity Multiplier
Current Year6.711.00.321.9
Previous Year7.710.50.361.7

6.2 High Debt Indicators:

+ Total Liabilities/EBITDA of 8 compares unfavourably with the Joseph Piotroski benchmark of 5.

6.3 Declining ADVT past five years

Avg. Daily Volume Traded 12 months ended Oct 09, million shares

YearADVT
20192.5
20182.5
20172.4
20162.9
20153.3

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 25.9% to 2.5 million shares.

6.4 Declining Average Daily Turnover

Past five years, 12 months ended Oct 09 (EUR million)

YearAverage Daily Turnover
2019186.1
2018170.0
2017178.2
2016195.3
2015254.7

In the past five years, average daily share turnover has decreased 27.0% to EUR186.1 million (US$203.9 million). This suggests decreased liquidity.

6.5 Decrease in Institutional Ownership (ADRs)

Quarter-endJune 30, 2018March 31, 2019June 30, 2019
Holdings (%)7.57.06.9

As at June 30, 2019 Institutions held 6.9% of total ADRs on issue; a decrease from 7.0% as at March 31, 2019 and 7.5% as at June 30, 2018.

SECTION 7 SANOFI SUMMARY FINANCIALS

7.1 Dividend History

Trailing 12 months dividend for the 12 months ended October 09 has improved from EUR2.85 in 2015 to EUR3.07 in 2019; there were no declines in the past 5 years. Dividends were up 1.3% for the 12 months ended October 09 from EUR3.03 in 2018 to EUR3.07 in 2019.

7.2 Financials Summary

Year endedDec 2018Dec 2017Dec 2016
Sales (USD B)39.239.738.1
Pretax (USD B)4.86.16.2
Net (USD B)4.79.35.2
EPS (EUR)544.054

+ Net profit was down 48.9% from US$9.3 billion in 2017 to US$4.7 billion in 2018.

+ Earnings Per Share (EPS) was up 25% from EUR4.0 to EUR5.0.

7.3 Annual Report: Key Parameters

FY2018 Annual Report: Sanofi profits hit by 48.9% fall

Sanofi (FR:SAN) reported net profit for the year-ended 31 December 2018 of EUR4.3b ($US4.9b), down 48.9% from EUR8.4b ($US10.1b) in the previous year.

Major changes compared with previous year:

Favourable Changes:

- EPS up 25% from EUR4.0 ($US4.8) to EUR5.0 ($US5.71)

Unfavourable Changes:

- Net profit slumps 48.9% from EUR8.4b ($US10.1b) to EUR4.3b ($US4.9b)

- EBIT Margin down from 15.3% to 12.3%

- EBIT to total assets down from 5.5% to 4.0%

- Total revenue to total assets down from 0.4 to 0.3

- Profit before tax to Sales down from 15.3% to 12.3%

- Debt to Equity up 55.6% from 0.3 to 0.4

- Total liabilities to Total assets up 11.9% from 0.4 to 0.5

- Current ratio down 17.1% from 1.7 to 1.4

- Working capital to total assets down from 10.9% to 6.5%

- Total current assets to Total Assets down from 26.4% to 22.1%

- Long-term investments to Total Assets down from 10.5% to 9.9%

- Total Liabilities to EBITDA of 8.0 compares unfavourably with the Joseph Piotroski benchmark of <5. This ratio has deteriorated by 41.7% from the previous year's ratio of 5.6.

Note:

- Sales revenue steady at EUR35.7b ($US40.8b)

- Sales and marketing expenses to Sales down from 27.8% to 27.6%

- Tax expenses to Sales down from 4.8% to 1.3%

- Intangibles to Total Assets up from 53.4% to 59.4%

Annual Report [Year-on-year comparison: 2018 vs 2017]

Company Name : Sanofi (SAN)
December 312018201720182017Change
DescriptionEUR mEUR m$US m$US m(%)
Sales Revenue35,67736,20440,775.443,439.5Down 1.5
EBITDA6,5757,3967,514.68,874.1Down 11.1
EBIT4,4055,5305,034.56,635.2Down 20.3
Pre-Tax Profit/(Loss)4,4055,5305,034.56,635.2Down 20.3
Profit/(Loss) after Tax4,3068,4344,921.310,119.6Slumps 48.9
Working Capital7,20310,8958,232.313,072.4Down 33.9
Current Assets24,57926,35228,091.431,618.5Down 6.7
Current Liabilities17,37615,45719,859.118,546.1Up 12.4
Shareholders' Funds58,87658,08967,289.669,698.3Up 1.4
Total Liabilities52,53241,73760,03950,078.3Up 25.9
Total Assets111,40899,826127,328.7119,776.6Up 11.6
Non-Current Debt22,00714,32625,151.917,189.1Up 53.6
Total Debt24,64015,60128,161.218,718.9Up 57.9
Net Assets58,87658,08967,289.669,698.3Up 1.4

Year-on-year comparison of Per Share figures

December 312018201720182017Change (%)
DescriptionEUR EUR $US $US
Sales28.62932.734.8Down 1.3
EBIT3.54.445.3Down 20.2
EBITDA5.35.967.1Down 11
Cash5.68.26.39.8Down 32.3
Working Capital5.88.76.610.5Down 33.8
Shareholders' Funds47.246.55455.8Up 1.5
Total Liabilities42.133.448.140.1Up 26.1
Total Assets89.379.9102.195.9Up 11.8
EPS Final545.74.8Up 25

Year-on-year comparison of Performance Ratios

December 3120182017Change (%)
Return on Equity (%)6.77.7Down 13
Return on Assets (%)3.53.8Down 7.9
Debt/Equity0.40.3Up 55.6
Total Liabilities/Total Assets0.50.4Up 11.9
Current Ratio1.41.7Down 17.1
Common Size Ratios by Assets %
Total non-current assets to Total Assets 77.9 nana
Intangibles to Total Assets 59.4 53.4 Up 11.2
Total current assets to Total Assets 22.1 26.4 Down 16.3
Current Inventory to Total Assets 15.8 nana
Long-term investments to Total Assets 9.9 10.5 Down 6.0
Common Size Ratios by Sales %
Cost of Goods Sold to Sales 32.1 32.1 Up 0.1
Sales and marketing expenses to Sales 27.6 27.8 Down 0.7
Profit before tax to Sales 12.3 15.3 Down 19.5
Tax expenses to Sales 1.3 4.8 Down 72.7

Currency Conversion (December 31, 2018): $US1 = EUR0.87

Currency Conversion (December 31, 2017): $US1 = EUR0.83

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged EUR34.9B ($US39.9B), EBITDA averaged EUR9B ($US10.2B) and Net Profit averaged EUR4.2B ($US4.8B). Compound Annual Growth Rate (CAGR) averaged 1.3% for Total Revenue, 3.0% for Net Profit and -8.6% for EBITDA.

DescriptionAnnual (EUR B)Annual ($US B)5-year Avg (EUR B)5-year Avg ($US B)5-year CAGR %
Total Revenue35.740.834.939.91.3
EBITDA6.67.5910.2(8.6)
Operating Profit4.455.56.3(3.3)
Net Profit4.34.94.24.83

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2018 Net Profit Margin of 11.0% was below its 5-year Avg of 12.2% (All Figures in %)

Description20185-year Avg
EBITDA Margin18.426.2
Operating Profit Margin12.316.1
Net Profit Margin1112.2
Return on Equity6.77.4
Return on Assets3.54.1
Return on Capital Employed4.76.4

SECTION 8 CORPORATE PROFILE

8.1 Activities

Sanofi is the largest European pharmaceutical group. Net sales per product family break down as follows: - pharmaceutical products (88,1%): for the treatment of cardio-vascular diseases, thrombosis, central nervous system disorders (insomnia, multiple sclerosis, epilepsy), cancers, allergies, etc. Moreover, Sanofi-Aventis markets OTC products and generic drugs; - human vaccines (11.9%): pediatric vaccines, vaccines for flu, meningitis, and polio, booster vaccines, and vaccines for travelers and endemic areas. At the end of 2009, the group had 72 production sites throughout the world. Net sales are distributed geographically as follows: France (10.9%), Europe (30.2%), the United States (32.2%), and other (26.7%).

8.2 Top Management

The chairman is Serge Weinberg, the chief executive officer is Paul Hudson and the chief financial officer is Jean-Baptiste Chasseloup De Chatillon.

8.3 Issued Capital and MCap

Based on 1,252,019,921 issued shares the market capitalisation is EUR102.5 billion (US$112.3 billion).

8.4 Vanguard Total World Stock ETF 7636:

The stock was one of 7636 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 640 shares in the period Jun 30, 2019 to Jul 31, 2019 worth $US48,485 at an estimated Volume Weighted Average Price (VWAP) of $US75.758. As at Jul 31, 2019, the Vanguard Total World Stock ETF held 358,133 shares worth $US30,268,702 or 0.17% by value of the ETF's portfolio [Ranked 83 out of 7636 by value and 3 out of 140 for France].

COMPANY IDENTIFIERS

Contact: +33 (0)1 53 77 40 00

Physical Address: 54 rue la Boetie 75008 Paris France

State/Province/Country: France

Country of Incorporation: France

Exchange: Euronext - Paris

Business Sector: Pharmaceuticals & Medical Research

Industry Group: Pharmaceuticals

Industry: Pharmaceuticals

Economic Sector: Healthcare

ISIN: FR0000120578

FR:SAN; EPA:SAN; PA:SAN; FP:SAN; SASY.PA

PermID: 4296871638

RIC: SASY.PA

Banco Santander Sa, Sanofi S.A., Sanofi Sa

Source: www.BuySellSignals.com