Royalty Pharma plc (RPRX) stock analysis

P/E above its 5-year median

Royalty Pharma's P/E of 48.8 is above its own 5-year median of 26.8.

P/E above the industry

Royalty Pharma's P/E of 48.8 is above the Drugs median of 25.0.

EV/EBITDA above its 5-year median

Royalty Pharma's EV/EBITDA of 34.0 is above its 5-year median of 25.8.

P/S above the industry

Royalty Pharma's price-to-sales of 15.23 is above the Drugs median of 4.73 (book value is negative, so we use sales).

Trading above fair value

The share price of $69.31 is above our fair value estimate of $43.25.

Margin of safety under 20%

The price is 60.3% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 2.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 161% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -12.0% over the last twelve months, against a 5-year average of -4.6% a year.

Growing faster than the industry

Revenue grew 11.4% over the last twelve months; the Drugs median is 7.7%.

Guidance lowered

Royalty Pharma lowered its 2026 interest paid outlook on Nov 4, 2026.

Gross margin trend

This company does not report gross profit.

Return on equity

Needs positive equity and five years of results.

Return on invested capital

Needs operating income and invested capital.

Return on equity against the industry

Needs positive equity.

Earnings shrank over 5 years

Net income shrank 4.6% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 25.7% over the last twelve months, against a 5-year average of 29.5%.

Net margin above the industry

Royalty Pharma's net margin of 25.7% is above the Drugs median of -53.5%.

Debt level

Needs debt and equity figures.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 34.5% of total debt.

Interest not well covered

Operating income covers interest expense 4.0 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 1.29 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.06; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Royalty Pharma paid dividends worth 1.7% of the share price over the last twelve months.

Yield below Treasuries

The 1.7% yield is below the 4.7% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Royalty Pharma yields 1.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 5 fiscal years.

Earnings cover

Needs dividends paid and net income.

Cash-flow cover

Needs dividends paid and free cash flow.