Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 2 Jun 2026
NVO· Healthcare
Novo Nordisk
Novo Nordisk is a diabetes and obesity franchise earning a 45 percent operating margin, now selling for under 11 times earnings as the crowd worries the magic is fading.
Buffett fit
Partial fit
Owner
100
Durability
100
Management
41
Price
61
Score updated 22 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Healthcare stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned the whole company I would be pleased with what management has built and uneasy about how the market now treats it.
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The durability score is a perfect 100, and the numbers earn it. Earnings have never had a down year in the window I can see, an EPS max decline of zero, and interest is covered 29 times over.
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Here is where I get cautious, and it is why the management score is only 41.
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At under 11 times earnings, a 10.7 , Novo looks cheap for a business this profitable, and the valuation score of 61 reflects a fair, not a giveaway, price.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1 of 45.3 percent and of 81.8 percent mark this as one of the most profitable businesses in any sector.
- 2 of 32.2 percent this year and 47 percent over five years shows capital is deployed at exceptional rates.
- 3Revenue at 21.7 percent and EPS at 22 percent prove the growth has been both fast and durable.
- 4Interest coverage of 29 times and zero peak earnings decline point to a fortress income statement that holds up through stress.
Concerns
6- 1 is only 28 percent of net income, so the owner-earnings yield is a thin 2.23 percent despite the cheap-looking , meaning you pocket far less cash than the headline multiple implies.
- 2The management score of 41 flags weak cash conversion as the soft spot in an otherwise brilliant business.
- 3A current ratio of 0.79, below one, signals tighter short-term liquidity than a conservative owner would want.
- 4 of 0.72 is manageable given the coverage, but it is real leverage on a balance sheet I would prefer to see cleaner.
Price history
$39.06-26.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Novo Nordisk sells insulin and the GLP-1 drugs behind Ozempic and Wegovy, and it sells them at extraordinary prices relative to cost. An 81.8 percent and a 45.3 percent tell you this is a business that turns a vial of medicine into a river of cash. Revenue has compounded at 21.7 percent and earnings at 22 percent, so the volume has been growing as fast as the margins are fat.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Healthcare
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