Alcon AG (NYSE: ALC) is a company that manufactures and markets products that tens of millions of people need.
Alcon (ALC) claims to be the world’s largest eyecare device manufacturer. Demand for eyecare is high because people like to see. For example, the Vision Council estimates 194.1 million adults use eyeglasses or contact lenses to correct their vision.*
Moreover, most people assume demand for eyecare will increase as the population ages. Statista estimates that 16.9% of the US population was over 65 in 2020. Statista projects the percentage of Americans over 65 will rise to 20.6% in 2030 and 22% in 2050.
Hence, Alcon’s market could grow in coming decades as the population ages. Predictably, many people will wonder if Alcon is a growth stock and a value investment.
Is Alcon a Growth Stock?
Mr. Market thinks Alcon (ALC) is a growth stock. To elaborate, Alcon’s share price rose from $58.83 on 24 August 2020 to $82.04 on 27 August 2021. Hence, Alcon’s shares are growing.
Alcon is experiencing extraordinary growth. Stockrow estimates Alcon’s revenues grew by 71.54% in the quarter ending on 30 June 2021. In contrast, Alcon’s revenues shrank by 35.36% in the quarter ending on 30 June 2020 and grew by 0.38% in the quarter ending on 31 March 2021.
Notably, Alcon’s quarterly revenues grew from $1.23 billion on 30 June 2020 to $2.111 billion on 30 June 2021. Similarly, Alcon’s quarterly gross profit grew from $401.3 million on 30 June 2020 to $1.22 million on 30 June 2021. Similarly, the quarterly operating income rose from -$466 million on 30 June 2020 to $229 million on 30 June 2021.
So Alcon is growing and making more money. But how much cash does Alcon generate?
How Much Money does Alcon Make?
Alcon (NYSE: ALC) can generate cash. Alcon’s quarterly operating cash flow rose from $28.21 million on 30 June 2020 to $386 million on 30 June 2021.
In contrast, the quarterly ending cash flow fell from $564 million on 30 June 2020 to -$198 million on 30 June 2021. Conversely, Alcon can generate enormous amounts of cash. It reported a quarterly ending cash flow of $1.564 billion on 31 March 2021.
Alcon borrows money, but it can pay debts. Alcon reported a quarterly financing cash flow of $624.90 million on 30 June 2020. However, the quarterly financing cash flow fell to -$73 million on 30 June 2021.
Alcon’s total debt fell from $4.486 billion on 30 June 2020 to $4.122 billion on 31 June 2021. Comparatively, Alcon’s cash and short-term investments rose from $1.333 billion on 30 June 2020 to $1.366 billion on 30 June 2021.
Is Alcon a Value Investment?
Thus, Alcon (ALC) finished the last year with slightly less debt and slightly more cash. Many people will wonder if Alcon is a value investment.
I consider Alcon a growth stock with an attractive margin of safety. I think the margin is safety is because of the growth. However, I think much of that growth occurred because people are no longer afraid to go to the eye doctor. To explain, many people stayed away from eye clinics because they are afraid of COVID-19.
Alcon is a cheaper stock that pays no dividend. If you are looking for an interesting value investment in healthcare. I think Alcon is worth a look because this stock is cheap and its revenue is growing.
Originally published at https://marketmadhouse.com on August 26, 2021.