Abbott Laboratories (ABT, Financial) has experienced a stable market performance with a 0% change in its daily stock price and a 3-month gain of 4.25%. With an Earnings Per Share (EPS) of 2.94, investors are keen to understand whether the stock is fairly valued. This article sets out to unravel the true valuation of Abbott Laboratories (ABT) by delving into a comprehensive analysis. Read on to discover the insights that can inform your investment decisions.
Company Introduction
Abbott Laboratories is a global healthcare leader that manufactures and markets a wide range of medical devices, nutritional products, diagnostic equipment, and branded generic drugs. With a significant 60% of sales generated outside the United States, the company boasts a diverse and robust portfolio. Abbott Laboratories (ABT, Financial) currently trades at $106.22 per share with a market cap of $184.40 billion, closely aligned with the GF Value of $107.51, suggesting a fair valuation. This introduction serves as the foundation for a deeper exploration of the company's intrinsic value.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated using historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. Abbott Laboratories (ABT, Financial) is considered fairly valued according to this metric. The GF Value Line suggests that the stock's long-term return is likely to mirror the company's business growth rate, provided the stock is bought at this fair value.
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Financial Strength
Investors must consider a company's financial strength to avoid the high risk of permanent capital loss. Abbott Laboratories' financial strength is fair, with a cash-to-debt ratio of 0.45, placing it in the lower quartile within its industry. However, the overall financial strength of Abbott Laboratories is rated 7 out of 10, which is reassuring for potential investors.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, poses less risk. Abbott Laboratories has been profitable for the past decade, with a strong operating margin of 15.02%, ranking well within its industry. The company's profitability is ranked at 9 out of 10, indicating robust financial health.
Growth is a critical valuation factor, often correlating with a company's long-term stock performance. Abbott Laboratories' 3-year average annual revenue growth rate is 11.4%, which is commendable. The 3-year average EBITDA growth rate stands at 16.4%, reflecting the company's ability to create value for shareholders.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another measure of profitability. Abbott Laboratories' ROIC of 9.62% surpasses its WACC of 8.3%, indicating efficient capital utilization.
Conclusion
Abbott Laboratories (ABT, Financial) is considered fairly valued, with a solid financial condition and strong profitability. The company's growth is impressive, surpassing more than half of its peers in the industry. For a detailed look at Abbott Laboratories' financials, investors can review the company's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
