Attractive P/E Ratio
Strong Net Profit Margin
High Return on Equity
Strong Liquidity Position
Low Debt Levels
Strong Sales Growth
Operational Excellence and Cash Flow Generation
Market Leadership and Product Innovation
Growth Forecast for 2025
Innovation Pipeline
High Price-to-Sales Ratio
Moderate Operating Profit Margin
Limited Cash Reserves
Market Challenges
Regulatory and Competitive Pressures
Abbott demonstrates strong business quality through diverse growth, operational excellence, and market leadership. Future prospects are positive with growth forecasts and an innovative pipeline, although challenges exist in terms of market competition and regulatory environments. Overall, the company appears well-positioned for continued success.
Analysis Date: January 22, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$297.96
Current Market Price: $124.63
IV/P Ratio: 2.39x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
57.99999999999999%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for ABT
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (16.08)
P/B ratio ≤ 1.5 (4.52)
Current ratio ≥ 2.0 (1.67x)
Long-term debt < Net current assets (1.42x)
Margin of safety (57.99999999999999%)
ABT does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
With a net profit margin of 31.95%, ABT demonstrates exceptional efficiency in converting revenue into actual profit, indicating strong earnings quality.
The return on equity (ROE) of 32.37% is impressive, signifying that the company is generating a high return on shareholder investment.
The operating profit margin of 16.55% is decent but could be improved, indicating potential room for better operational efficiency.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
32.37%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
11.34%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
55.59%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
31.95%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 1.67 and quick ratio of 1.23 indicate that the company has a solid liquidity position, ensuring it can meet short-term obligations.
A debt-to-equity ratio of 0.32 shows that ABT maintains a conservative approach to leverage, which is a positive sign for long-term financial stability.
The cash ratio of 0.54 indicates that while the company has liquidity, it may not have sufficient cash reserves to cover short-term liabilities fully.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.31x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.67x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Abbott reported a robust sales growth of 9.5% excluding COVID testing, with a particularly strong Q4 showing 10% growth. This growth is attributed to diverse segments including Nutrition, Diagnostics, EPD, and Medical Devices.
The company generated $8.5 billion in operating cash flow, which was strategically reinvested in capacity expansions, debt repayment, and shareholder returns through dividends and share repurchases.
Abbott's diverse portfolio includes leading brands such as Ensure and Glucerna in Nutrition, and significant advancements in Medical Devices, particularly in Diabetes Care and Structural Heart, which posted a 23% growth.
The company faces challenges such as FX headwinds and a competitive environment in certain segments, particularly in electrophysiology and diagnostics, which could affect growth.
Abbott expects organic sales growth to be between 7.5% and 8.5% for 2025, with adjusted EPS guidance reflecting double-digit growth at the midpoint.
Abbott has a strong pipeline of new products and continuous innovation, particularly in Diabetes Care with the Libre 3 and Lingo launch, which are expected to drive future growth.
The company may face regulatory challenges and competition in key areas such as EP and diagnostics, which could impact growth rates in those segments.