Alcon Inc. Ordinary Shares (ALC)

FairStock Score: 36/100 — MIXED

Key Financials

Strengths

• Generates $1.2 billion in annual free cash flow (3.2% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.24, providing financial flexibility
• Established organization with 25,942 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($45) with negative 70% margin of safety—limited downside protection
• Altman Z-Score of 1.0 places it in the financial distress zone—elevated bankruptcy risk
• No meaningful dividend despite modest growth—total return depends entirely on multiple expansion

AI Analysis

Alcon Inc. Ordinary Shares is a mid-cap healthcare company valued at $38.0 billion. The business generates $10.4 billion in annual revenue with a 2.1% net margin and $1.2 billion in free cash flow. From a quality standpoint, Alcon shows solid Piotroski F-Score of 6/9 and distressed Altman Z-Score of 1.0 warrants caution. On valuation, the stock is trading at a premium 38.3x earnings, with trades above its Graham Number with a negative 70% margin. Growth dynamics show revenue growing at 8.6% and profit growth of -23.6%. Our composite FairStock Score of 31/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $1.2 billion in annual free cash flow (3.2% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 38x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer