Bristol-Myers Squibb Co. (NYSE:BMY)

An analysis of the valuation ratios reveals a general period of multiple compression from early 2022 through 2023, followed by a period of volatility and partial recovery in later quarters.

Price to Earnings (P/E) Ratio

A significant contraction is observed from March 2022, where the ratio stood at 25.64, falling to a low of 12.27 by December 2023. This downward trend suggests a decrease in market willingness to pay a premium for earnings during this window. Following a gap in reporting, the ratio stabilized between 15.38 and 18.29 throughout 2025 and early 2026, indicating a partial recovery but remaining well below 2022 peaks.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio exhibits a consistent long-term decline. Starting at 20.32 in March 2022, the ratio trended downward to 13.53 by the end of 2023. Unlike the P/E ratio, the P/OP did not see a substantial rebound in 2025, ending at 12.42 in March 2026. This indicates a sustained compression in valuation relative to operating profitability over the analyzed period.

Price to Sales (P/S) Ratio

The P/S ratio remained relatively stable in 2022 before declining throughout 2023 to reach 2.19. A trough was observed in March 2024 at 1.99, after which a gradual upward trend emerged. The ratio climbed to 2.55 by March 2026, suggesting a modest recovery in the market valuation of the company's revenue streams.

Price to Book Value (P/BV) Ratio

The P/BV ratio demonstrated the highest level of volatility. After declining from 5.07 in March 2022 to a low of 3.35 in December 2023, the ratio experienced a sharp expansion in 2024, peaking at 6.98 in December 2024. This expansion was followed by a correction in early 2025 and a subsequent rise back to 6.17 by March 2026, reflecting significant fluctuations in the relationship between market price and book value.

Overall, the metrics indicate a synchronized decline in valuation multiples through 2023. While revenue and earnings multiples showed signs of stabilization or recovery in 2025 and 2026, the operating profit multiple continued to weaken, and the book value multiple diverged from the other trends with increased volatility.

The valuation metrics exhibit a period of significant volatility and a general compression of the price-to-earnings (P/E) multiple over the analyzed timeframe. The transition from 2022 to 2026 is characterized by a sharp decline in valuation multiples, a severe earnings contraction in 2024, and a subsequent partial recovery in both share price and profitability.

P/E Ratio Compression and Volatility

A consistent downward trend in the P/E ratio is observed from March 2022 (25.64) through December 2023 (12.27). This compression occurred despite a general increase in earnings per share during the same period, suggesting a decline in investor confidence or a market re-rating of the asset's value. Following a gap in P/E reporting during 2024 due to negative earnings, the ratio reappeared in March 2025 at 18.29 and stabilized between 17.01 and 17.46 through March 2026.

Earnings Per Share (EPS) Performance

Earnings showed steady growth from March 2022 (2.94) to September 2023 (4.07). However, a drastic reversal occurred in 2024, with EPS falling into negative territory, reaching a low of -4.41 in December 2024. A recovery began in March 2025 (2.66) and continued an upward trajectory, ending at 3.56 by March 2026.

Share Price Correlation

The share price exhibited a strong downward correlation with the P/E compression throughout 2023, falling from 67.61 in March to 48.71 in December. The price reached its lowest point of 43.31 in June 2025, coinciding with the period of earnings recovery. A notable rebound is observed in late 2025, with the price climbing to 60.59 by March 2026, reflecting a return to positive earnings and a stabilizing valuation multiple.

In summary, the valuation shifted from a high-multiple environment in early 2022 to a more conservative valuation by 2026. The most critical disruption occurred throughout 2024, where negative earnings rendered the P/E ratio inapplicable, though the subsequent recovery in EPS helped restore the share price to levels closer to the 2023 baseline.

The financial trajectory of the company is characterized by a period of valuation contraction, a significant operational downturn, and a subsequent recovery in both profitability and share price.

Share Price Trends

A prolonged decline in share price is observed from March 2022, when the price was $75.27, reaching a minimum of $43.31 in June 2025. Following this trough, a recovery phase occurred, with the share price ascending to $60.59 by March 2026.

Operating Profit per Share (OPPS) Volatility

Operating profit per share remained relatively stable and positive between March 2022 and December 2023, ranging from $3.60 to $4.19. A sharp reversal occurred in the first quarter of 2024, leading to a period of negative operating profits that persisted through December 2024, with a low of -$3.69. Profitability returned in March 2025 and showed a strong upward trend, peaking at $4.91 in December 2025 before settling at $4.88 in March 2026.

Price to Operating Profit (P/OP) Analysis

Between March 2022 and December 2023, the P/OP ratio experienced a steady compression, falling from 20.32 to 13.53. This indicates a reduction in the market multiple applied to operating earnings prior to the operational downturn. The ratio was not applicable during the 2024 period of negative operating profits. Upon the return to profitability in March 2025, the P/OP ratio remained significantly lower than its 2022 peaks, fluctuating between 10.25 and 13.65. This suggests that while the company recovered its operational capacity, the market valuation relative to operating profit has reset to a lower baseline.

The valuation of the equity relative to sales experienced a prolonged contraction from early 2022 through mid-2025, followed by a distinct recovery period through the first quarter of 2026. The Price to Sales (P/S) ratio shifted from a peak of 3.41 in March 2022 to a minimum of 1.85 in June 2025, indicating a significant compression in the market's valuation of each dollar of revenue generated.

Share Price Volatility

The primary driver of the P/S ratio fluctuations was the share price. A sustained downward trajectory is observed from March 2022 ($75.27) to June 2025 ($43.31). This decline represents a reduction of approximately 42% in share value over the period. However, a recovery trend emerged in the latter half of 2025, with the price climbing to $60.59 by March 2026.

Sales per Share Stability

In contrast to the volatility of the share price, sales per share remained relatively stable with a slight positive drift. Starting at $22.06 in March 2022, sales per share increased marginally to $23.74 by March 2026. This consistency suggests that the changes in the P/S ratio were not caused by operational revenue declines, but rather by shifting market sentiment or external valuation pressures.

P/S Ratio Dynamics

The P/S ratio exhibited a steady decline throughout 2022 and 2023, breaking below the 2.00 threshold in March 2024. The ratio reached its lowest point of 1.85 in June 2025. A subsequent rebound is evident from September 2025 onward, as the ratio rose to 2.55 by March 2026. This indicates a partial restoration of the valuation multiple, though it remains below the 2022 levels.

The inverse relationship between the stable sales per share and the fluctuating share price confirms that the P/S ratio during this period served as a proxy for market sentiment rather than a reflection of fundamental changes in revenue generation capacity.

The analysis of the price-to-book value (P/BV) ratio reveals three distinct phases of valuation movement between March 2022 and March 2026, characterized by an initial contraction, a structural shift in book value, and subsequent volatility during a price recovery.

Initial Valuation Contraction (March 2022 – December 2023)

During this period, the P/BV ratio exhibited a consistent downward trend, declining from 5.07 to 3.35. This compression was driven primarily by a steady decrease in the share price, which fell from $75.27 to $48.71. Throughout this phase, the book value per share (BVPS) remained relatively stable, fluctuating within a narrow range between $14.25 and $15.37, indicating that the valuation decline was a result of market price depreciation rather than a deterioration of underlying book assets.

Structural Book Value Adjustment (March 2024 – December 2024)

A significant inflection point occurred in the first quarter of 2024, where BVPS dropped sharply from $14.55 to $8.13. This substantial reduction in book value caused an immediate spike in the P/BV ratio to 5.49. As the share price began a moderate recovery toward the end of 2024, reaching $56.15, the P/BV ratio climbed to a peak of 6.98 by December 31, 2024, marking the highest valuation multiple in the observed period.

Price Recovery and Ratio Volatility (March 2025 – March 2026)

The final phase is characterized by fluctuations in both share price and the resulting P/BV ratio. A dip in the share price to $43.31 in March 2025 led to a temporary correction of the P/BV ratio to 5.70. However, a strong rally in the share price toward the end of 2025, peaking at $59.93 in September and $60.59 in March 2026, pushed the P/BV ratio back up to a high of 6.61 in December 2025. Despite a modest increase in BVPS to $9.83 by March 2026, the ratio ended the period at 6.17, reflecting a market valuation that remains significantly elevated relative to the adjusted book value.

Overall, the data indicates that the P/BV ratio transitioned from being driven by share price volatility in the first two years to being driven by a fundamental reduction in book value per share from 2024 onward. The resulting higher multiples in the latter period suggest the market is attributing a higher premium to the company's assets than was the case prior to 2024.