Abbott Laboratories (ABT, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $119.86, Abbott Laboratories has witnessed a daily gain of 0.33%, marked against a three-month change of 16.88%. A thorough analysis, underlined by the GF Score, suggests that Abbott Laboratories is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 5/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high Financial Strength, Profitability, and Growth rank, and a perfect Momentum rank, Abbott Laboratories is poised for success. The slightly lower GF Value rank indicates that the stock might not be undervalued at the moment. GuruFocus assigned Abbott Laboratories the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Abbott Laboratories Business
Abbott Laboratories, with a market cap of $207.98 billion and sales of $40.11 billion, is a diversified healthcare giant. The company boasts an operating margin of 16.15% and has a broad portfolio that includes cardiovascular and diabetes devices, adult and pediatric nutritional products, diagnostic equipment and testing kits, and branded generic drugs. Abbott Laboratories derives approximately 60% of sales outside the United States, showcasing its global reach and diversified revenue streams.
Financial Strength Breakdown
Abbott Laboratories's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The company's Interest Coverage ratio stands impressively at 10.17, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 5.36, Abbott Laboratories exhibits a strong defense against financial distress, highlighting its robust financial stability. The favorable Debt-to-Revenue ratio of 0.39 solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Abbott Laboratories's impressive standing among its peers in generating profit. The company's Operating Margin has increased over the past five years, with a current margin of 16.15%. This trend reflects Abbott Laboratories's efficiency in managing its operations and its ability to convert sales into actual profit.
Abbott Laboratories's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence in the company's ability to maintain its profitability.
Growth Rank Breakdown
Abbott Laboratories demonstrates a strong commitment to expanding its business, as evidenced by its high Growth rank. The company's 3-Year Revenue Growth Rate is 5.8%, which, while not leading the Medical Devices & Instruments industry, still shows a solid trajectory. The robust increase in EBITDA over the past few years, with a three-year growth rate of 6.8 and a five-year rate of 11.5, accentuates the company's continued capability to drive growth.
Conclusion: A Strong Investment Case for Abbott Laboratories
Considering Abbott Laboratories's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's diversified product portfolio, global presence, and strategic management of its financials and operations make it a compelling choice for investors seeking a stable yet growing investment. With a GF Score of 93, Abbott Laboratories stands out as a strong contender in the healthcare sector, promising both stability and growth.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
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.
