Jazz Pharmaceuticals plc (JAZZ) Stock Analysis
Jazz Pharmaceuticals plc (JAZZ) Stock Analysis
Overall Grade: F (Concerning)
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Jazz Pharmaceuticals plc faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | -2.6% | Below expectations |
| FCF Margin | 6.1% | Healthy cash flow |
| Debt/Equity | 1.2x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is Jazz Pharmaceuticals plc's Profitability and ROIC?
Jazz Pharmaceuticals plc's return on invested capital of -2.6% is below the typical cost of capital.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -2.6% | Red flag | Below cost of capital |
| Return on Equity (ROE) | -8.9% | Red flag | Moderate equity returns |
| Operating Margin | -10.1% | Warning | Moderate operational efficiency |
How Strong is Jazz Pharmaceuticals plc's Cash Flow Quality?
Jazz Pharmaceuticals plc generated $258.2M in free cash flow over the trailing twelve months, representing a 6.1% margin. FCF was positive in N/A of the last 8 quarters, indicating variable cash generation.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 6.1% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $258.2M | Good | Positive cash generation |
| OCF/Net Income | -3.8x | Warning | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is Jazz Pharmaceuticals plc's Financial Health?
Jazz Pharmaceuticals plc's debt-to-equity ratio of 1.2x indicates moderate leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 1.2x | Adequate | Moderate leverage |
| Net Cash Position | $-4.0B | Warning | Net debt position |
Is Jazz Pharmaceuticals plc Stock Overvalued or Undervalued?
Jazz Pharmaceuticals plc trades at a P/E of -29.4x, representing a premium to the sector median of N/A. Free cash flow yield of 2.5% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | -29.4x | Red flag | Reasonable valuation |
| EV/Sales | 3.3x | Good | Growth premium priced in |
| FCF Yield | 2.5% | Adequate | Lower cash yield |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -2.6% | Bottom 50% | - |
| Free Cash Flow Margin | 6.1% | Top 50% | - |
| Operating Margin | -10.1% | Bottom 50% | -2.2x below |
| Return on Equity (ROE) | -8.9% | Top 50% | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: -2.6% (Red flag - Bottom 50% of sector (median: 0.0%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 6.1% (Adequate - Top 50% of sector (median: 0.0%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 124.1% (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 2.5% (Warning)
Frequently Asked Questions
Q: What is Jazz Pharmaceuticals plc's Return on Invested Capital (ROIC)?
Jazz Pharmaceuticals plc (JAZZ) has a trailing twelve-month Return on Invested Capital (ROIC) of -2.6%. This compares below the sector median of 0.0%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is Jazz Pharmaceuticals plc's Free Cash Flow Margin?
Jazz Pharmaceuticals plc (JAZZ) has a free cash flow margin of 6.1%, generating $258.2 million in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is Jazz Pharmaceuticals plc stock overvalued or undervalued?
Jazz Pharmaceuticals plc (JAZZ) trades at a P/E ratio of -29.4x, which is above the sector median of N/A. The EV/Sales multiple is 3.3x. Free cash flow yield is 2.5%, reflecting growth expectations priced into the stock.
Q: How much debt does Jazz Pharmaceuticals plc have?
Jazz Pharmaceuticals plc (JAZZ) has a debt-to-equity ratio of 1.2x with total debt of $5.4 billion. Net debt position is $4.0 billion.
Q: What is Jazz Pharmaceuticals plc's revenue and earnings growth?
Jazz Pharmaceuticals plc (JAZZ) grew revenue by 4.9% year-over-year. Modest growth indicates a mature business with stable demand.
Q: Is Jazz Pharmaceuticals plc buying back stock?
Jazz Pharmaceuticals plc (JAZZ) repurchased $125.0 million of stock over the trailing twelve months. This represents a buyback yield of 1.2%.
Q: How does Jazz Pharmaceuticals plc compare to competitors in Healthcare?
Compared to other companies in Healthcare, Jazz Pharmaceuticals plc (JAZZ) shows: ROIC of -2.6% is below the sector median of 0.0% (Bottom 47%). FCF margin of 6.1% exceeds the sector median of 0.0% (Top 31% of sector). These rankings are based on MetricDuck's analysis of all Healthcare companies with available SEC filings.
Q: What warning signs should I watch for with Jazz Pharmaceuticals plc?
Jazz Pharmaceuticals plc (JAZZ) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-05. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.