Stock Evaluation
Company Description: ORGANON  9 Jan 2025
Company description: “Organon & Co. is a global health care company. The Company is engaged in developing and delivering health solutions through a portfolio of prescription therapies and medical devices within women's health, biosimilars and a franchise of established medicines across a range of therapeutic areas. It has a portfolio of contraception and fertility brands, including Nexplanon, NuvaRing, and Follistim AQ. Its Biosimilars portfolio spans across immunology and oncology treatments. It also has a portfolio of established brands, including brands in cardiovascular, dermatology and non-opioid pain management. It sells these products through various channels, including drug wholesalers and retailers, hospitals, government agencies and managed health care providers, such as pharmacy benefit managers and other institutions. Its portfolio also includes VTAMA (tapinarof) cream, 1%, a nonbiologic, non-steroidal topical therapy, for treatment of mild, moderate, and severe plaque psoriasis in adults.."

Business Valuation Algorithm Criteria in 10 Steps 

Step 1: Marketplace
Is the marketplace/sector expanding? - Yes biotech, womens' health, and AI (Green Flag)
Is the company’s share of the marketplace expanding?​- Yes
​Does this marketplace have good profit margins?
Yes at 20.30% x $6.5B revenue (Huge Green Flag)

Step 2: Leadership
Does the company display strong leadership, entrepreneurial character and competitiveness?​
CEO Kevin Ali has over 30 years of experience in healthcare and commercialization (Neutral Flag)

Step 3 Earnings
Have earnings been rising during the last 3 years? 
No, earnings have gone down. (Red Flag)
Are earnings projected to continue to go up this year and next year?
No, earnings have been flat. (Neutral Flag)

Step 4 Cumulative Earnings
What is the cumulative value of 5 years of earnings shown compared to the stock price? 
155.4% (Huge Green Flag)

Step 5 Price to Earnings Ratio
What is the price over earnings? 
3.7 (Huge Green Flag for value)
What is the 5 year growth percentage? 
-30% (Red Flag )
What is the 5 yr growth % compared to the P/E? 
1% growth vs 3.7 P/E (Neutral Flag)
What is the 5 yr growth % compared to next years growth %? 
1% vs -0% next year growth (Neutral Flag)

Step 6 Dividends
Is the dividend generous (ie: above 4%)?
7.25% (Huge Green Flag)
Is the dividend easily covered by earnings?
E = 4x Div (Huge Green Flag)
Is the stock a dividend aristocrat (ie: dividend growth on a yearly basis over 25 years).
Yes (Green Flag)

Step 7 Global Reach
Does the company sell globally?
Yes - (Green Flag)

Step 8 Directors
Do the directors own more than 10% of the company?
<1% (Neutral Flag)
Are directors adding to their share ownership? 
No.  (Neutral Flag)
Is the company buying back its shares?
No.  (Neutral Flag)

Step 9 Using AI as a tool to confirm a stock information
To Gemini: is Organon CCA a good stock to buy now?

As of January 8, 2025, Organon & Co. (OGN) had a consensus rating of "hold".
Some say that Organon is a good value and that its earnings power
and future re-rating are promising.
However, others say that the stock has not performed well so far in 2023. 
Valuation
Organon's forward price-to-earnings (P/E) ratio is lower than the industry average.
However, the company's debt is still high. 
Analyst recommendations
As of January 8, 2025, Organon's average brokerage
recommendation was 2.63 out of 5, which is considered neutral. 
Earnings estimates
Some analysts have lowered their earnings estimates for Organon. 
Industry outlook
The healthcare industry is expected to grow quickly, and some say that 2024
could be a year of recovery. 

What others say 
Some say that Organon's recent acquisition of Dermavant could be accretive by 2026.
Some say that Organon's debt is gradually coming down, which could allow for a re-rating.
Some say that Organon's dividend yield is solid.

Final Thoughts
This spinoff from Merck is pointed toward strong emerging sectors of AI, biotech and women's health. It has a huge earnings yield of 26.8%, and dividend of 7.25% but it seems stagnant in earnings growth. Based on analysts estimated earnings projections found on LSEG, the price is projected to almost quintuple from $15.44 to $87.63 over the next 5 years. This is considered a value buy as its present price is below a discounted 5 year growth rate of 20% to meet that $87.63 target price. It ss also considered a Magic Formula buy as its profit margin (20.30%) plus its earnings yield (26.8%) is above 30.

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Algorithm