• If you are wondering whether Amneal Pharmaceuticals is still priced attractively after its recent run, you are not alone.
• The stock last closed at US$13.95, with returns of 1.8% over 7 days, 8.1% over 30 days, 10.2% year to date, 59.8% over 1 year, and a very large 3 year return alongside a 183.5% return over 5 years.
• Recent coverage has focused on Amneal Pharmaceuticals as investors reassess the company and its place in the US pharmaceuticals and biotech space. These developments give extra context to the strong multi year share price performance and help frame the current debate around value and risk.
• Amneal Pharmaceuticals currently scores 5/6 on our valuation checks. Next, we will compare different valuation methods to see what they imply for the share price, before finishing with a simple framework that can help you make sense of valuation more clearly.

Approach 1: Amneal Pharmaceuticals Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes the cash the business is expected to generate in the future, then discounts those cash flows back to today to estimate what the whole company might be worth right now.

For Amneal Pharmaceuticals, the latest reported Free Cash Flow is about $245.7 million. Using a 2 Stage Free Cash Flow to Equity model, analysts and extrapolated estimates project Free Cash Flow rising to around $1.15 billion in 2035. In the nearer term, one of the explicit projections is $500 million of Free Cash Flow in 2027, with the years in between and beyond filled in using Simply Wall St’s growth assumptions.

When all of those projected cash flows are discounted back to today, the model arrives at an estimated intrinsic value of US$69.18 per share. Compared to the recent share price of US$13.95, this DCF implies the stock trades at a 79.8% discount to that estimate, which in this analysis indicates Amneal Pharmaceuticals is materially undervalued on this cash flow view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Amneal Pharmaceuticals is undervalued by 79.8%. Track this in your watchlist or portfolio, or discover 877 more undervalued stocks based on cash flows.

Approach 2: Amneal Pharmaceuticals Price vs Sales

For a business like Amneal Pharmaceuticals, where investors often pay close attention to revenue scale and market position, the P/S ratio can be a useful cross check on valuation. It compares what the market is paying for each dollar of sales, which is particularly handy when earnings figures are less informative or more volatile.

What counts as a “normal” or “fair” P/S ratio usually reflects how the market views a company’s growth potential and risk profile. Higher expected growth or lower perceived risk can justify a higher multiple, while lower growth or higher risk tends to point to a lower one.

Amneal currently trades on a P/S ratio of 1.49x. That is below the Pharmaceuticals industry average of 4.90x and also below the peer group average of 6.96x. Simply Wall St’s Fair Ratio for Amneal is 2.99x, which is its proprietary estimate of a suitable P/S given factors such as growth expectations, profit margins, industry, market cap and risk. This Fair Ratio is designed to be more tailored than a simple comparison with peers or the broad industry because it adjusts for the company’s specific characteristics.

Comparing Amneal’s current 1.49x P/S with the Fair Ratio of 2.99x indicates that the shares trade below that tailored benchmark.

Result: UNDERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Amneal Pharmaceuticals Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your own story about Amneal Pharmaceuticals linked directly to your assumptions about its fair value, future revenue, earnings and margins.

A Narrative connects what you believe about the company, such as its product pipeline or competitive position, to a specific financial forecast and then to a fair value, so you can see how your view translates into numbers.

On Simply Wall St, millions of investors use Narratives on the Community page as a straightforward tool, where you compare your Fair Value to the current price to help decide whether Amneal Pharmaceuticals looks attractive, fully priced or expensive.

Because Narratives update when new information like news or earnings is added to the platform, your view of Amneal can adjust quickly. For example, one investor might set a relatively conservative fair value while another assigns a much higher figure based on a different outlook, and both Narratives sit side by side for you to compare.

Do you think there's more to the story for Amneal Pharmaceuticals? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.