Sigma Pharmaceuticals Limited Company Valuation - Example

The paper “Sigma Pharmaceuticals Limited Company Valuation” is a spectacular example of a report on business. Sigma Pharmaceuticals Limited is a leading full-line wholesale and distribution business to pharmacy. It is also the owner of two of Australia’s best-known pharmacy retail brands in Amcal Max, Amcal and Guardian. It is also Australia’s largest pharmacy-led network. The purpose of this valuation is to assess the prevailing market value of Sigma stock as of July 2012 and to provide an informed opinion on which a buy or sell decision can be made.

Five different valuation techniques were employed; Dividend Discount Model (DDM); Free Cash Flow to Equity (FCFE); Price Earnings Ratio (P/E); Price to Book Value Ratio (P/BV) and Net Tangible Asset Backing (NTAB). Two methods were discarded, with reasons given. Results show that there are bright prospects for Sigma Company. In conjunction with qualitative information regarding the earnings potential for the company, we make a buy recommendation. However, ultimately the decision will come down to the individual investors.

1. Company Analysis
1.1 Overview
Sigma Pharmaceuticals is an Australian based and ASX listed company headquartered in Australia It engages in the manufacture and sale of ophthalmology related over-the-counter, prescription, and generic pharmaceutical products.

1.2 History
Sigma has a long history in the pharmaceutical industry, spanning decades. Founded by two Melbourne pharmacists in 1912, it has grown to become one of the key players in Australia’s pharmacy industry. This is according to information provided on its website (2013). Sigma is a leading full-line wholesale and distribution business to pharmacy. Sigma is also the owner of some of Australia’s best-known pharmacy brands in Amcal, Guardian, and Amcal Max.

1.3 Share price performance
According to data from the financial times(2013), Sigma’s share has increased by 14.93% from the last financial period. The current share price stands at AUD 0.77.

Picture courtesy of Financial Times, 08-05-2013
With an on-market share buyback of up to 10%, the share price is expected to increase further.