Unique Approach Gives Sanofi An Edge

Current shareholders should hold Sanofi (SNY) long-term, and interested investors may consider initiating a position around the upcoming earnings release. Sanofi is an appealing investment for a defensive position due to its adequate dividend, comparable metrics to its peers, and positive operational outlook. Engaging in partnerships, effective bolt-on acquisitions and recently announcing successful clinical trials regarding multiple sclerosis, diabetes and other ailments are reasons enough to be bullish on Sanofi for the near term and long term.

Pfizer (PFE), Novartis (NVS), Merck (MRK) and GlaxoSmithKline (GSK) are the major pharmas that are most comparable to Sanofi based on competitive markets and market cap. Sanofi’s price is around 13.7 times earnings, 2.5 times sales, and 1.6 times its book value. These price ratios are the lowest of the aforementioned firms. GlaxoSmithKline’s 13.8 price-to-earnings and 2.6 price-to-sales ratio are the closest to Sanofi. Sanofi’s EPS is around $3.15; this is higher than both Pfizer and Merck by around $2 and $1, respectively. Sanofi’s EPS growth is around 2.7% in 2012 and projected at a 0.25% deficit in 2013, these are only higher than Novartis’ 11.2% decline in 2012 and Merck’s projected 2.8% EPS decline in 2013.

Sanofi’s sales have increased 3.5% over the past 5 years. Its ROE is around 11.9%, its operating margin is around 19.5%, and its profit margin is around 15.9%. Sanofi’s 1.08 short ratio, 0.11% float short and 0.29 debt-to-equity ratio are the lowest among these pharmas. Its beta score is the highest among these firms while its average volume is around 2.3 million. The stock is down 1.4% over the past month but has increased 23.7% YTD; only Merck’s 24.8% YTD growth is higher. To continue reading, click here.