West Pharmaceutical Services Inc (WST) stock analysis

P/E above its 5-year median

West Pharmaceutical Services's P/E of 46.3 is above its own 5-year median of 43.4.

P/E above the industry

West Pharmaceutical Services's P/E of 46.3 is above the Surgical, Medical, and Dental Instruments and Supplies median of 27.7.

EV/EBITDA below its 5-year median

West Pharmaceutical Services's EV/EBITDA of 29.5 is below its 5-year median of 31.7.

P/B above the industry

West Pharmaceutical Services's price-to-book of 9.69 is above the Surgical, Medical, and Dental Instruments and Supplies median of 3.22.

Trading above fair value

The share price of $412.86 is above our fair value estimate of $318.89.

Margin of safety under 20%

The price is 29.5% 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 under 10% a year

Diluted EPS grew -4.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 29.9% over the last twelve months, against a 5-year average of 7.4% a year.

Growing faster than the industry

Revenue grew 12.6% over the last twelve months; the Surgical, Medical, and Dental Instruments and Supplies median is 11.0%.

Guidance raised

West Pharmaceutical Services raised its full-year 2026 organic net sales growth outlook on Jul 23, 2026.

Gross margin improving

Gross margin was 37.6% over the last twelve months, against 35.6% a year earlier.

Return on equity over 15%

Return on equity was 21.2% over the last twelve months and averaged 22.2% over five years.

Return on capital over 10%

Return on invested capital was 23.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

West Pharmaceutical Services's return on equity of 21.2% is above the Surgical, Medical, and Dental Instruments and Supplies median of -31.3%.

Earnings grew over 5 years

Net income grew 7.4% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 18.8% over the last twelve months, against a 5-year average of 19.4%.

Net margin above the industry

West Pharmaceutical Services's net margin of 18.8% is above the Surgical, Medical, and Dental Instruments and Supplies median of -14.1%.

Low debt

Debt is 6.8% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 13.8% five years ago to 6.8%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 323% of total debt.

Interest well covered

Operating income covers interest expense 96.3 times.

Short-term assets cover short-term debts

Current assets are 2.82 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 19.27; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

West Pharmaceutical Services paid dividends worth 0.2% of the share price over the last twelve months.

Yield below Treasuries

The 0.2% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; West Pharmaceutical Services yields 0.2%.

Dividend not cut

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

Covered by earnings

Dividends take 9.8% of net income.

Covered by free cash flow

Dividends take 13.9% of free cash flow.