West Pharmaceuticals (WST) manufactures and sells containment and delivery systems for injectable drugs and healthcare products in the United States, Germany, Ireland, France, Other European countries, and internationally. (WST) has risen in price in the last nine months likely due to the Covid-19 situation in anticipation that it’s products will be needed en masse.
West Pharma is ‘First Class,’ failing only 1 of 5 Dividend System criteria. It has ‘Premier’ status being in the upper percentiles of this month’s stock universe. The company has increased dividends for 28 years, making it a member of the Dividend Aristocrats. We consider WST to be a Growth stock.
WST’s 5-year average dividend growth rate is 8.3%, slightly below the dividend universe average of 11%. Free cash flow has grown at an average rate of 30.6% per year for the last 5 years versus the dividend universe at 6.5%, so WST is performing very well.
WST’s current dividend yield is .24%, less than half of the average at 2.95%.
We use the Dividend Coverage Ratio to measure the dividend’s safety – higher is better. WST has a DCR of 8.8 which is excellent, well above the minimum of 2.
The price at time of analysis was $271.63, which we consider Overpriced. A fair price based on historical PE ratio and earnings would be around $134.43.
The Dividend Yield and Price/Earnings Ratio indicate that WST currently has ‘No buy signal.’ But we feel it’s an Evergreen stock and should be bought on the dips.
Based on our Dividend System™ comparative rankings, we rate West Pharmaceutical Services Inc a ‘A+.’
What is your opinion of WST?