This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
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As a holder of Pfizer, I am not in the market for another pharmaceutical company. However, with the strong dividend growth that Abbott Labs has seen in the past 10 years, I would be tempted if the price was right. Let’s have a look at ABT to see how it shapes up in the fundamentals and valuation departments.
The Company: Abbott Labs (ABT-NYSE)
Abbott Laboratories is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Abbott products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Abbott comprehensive line of products encircles life itself addressing important health needs from infancy to the golden years.
| Yes | |
| Yes |
THE FUNDAMENTALS
Revenue
Click to EnlargeRevenue Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My Revenue Score | 1.0 |
Earnings Per Share
Click to EnlargeEarnings Per Share Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My EPS Score | 0.5 |
TOTAL FUNDAMENTALS SCORE: 1.5
THE RATIOS
Return on Equity
Click to EnlargeReturn on Equity Scoring
| Criteria | Scoring |
| Above 15% for Last 5 Years | 1.0 |
| At Least One Year Below 15% in Last 5 Years | 0.0 |
| My ROE Score | 1.0 |
Other Ratios
| Ratio | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Debt to Equity | Less Than 0.50 | 0.69 | 0.0 |
| Payout Ratio | Less Than 60% | 55% | 1.0 |
| Credit Rating | BBB+ | AA | 1.0 |
| Total Ratio Score | 2.0 |
TOTAL RATIOS SCORE: 3.0
DIVIDEND DATA
Annual Dividends
Click to EnlargeDividend Scoring
| Criteria | Scoring |
| 25+ Years of Dividend Growth | 1.0 |
| 10+ Years of Dividend Growth | 1.0 |
| Less Than 10 Years of Dividend Growth | 0.0 |
| My Dividend Growth Score | 2.0 |
TOTAL DIVIDEND GROWTH SCORE: 2.0
STOCK VALUATION
| Valuation Metric | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Dividend Yield | Cur Yld Greater Than 10 Yr Avg Yld | 2.2% | 1.0 |
| Div Yld Compared to SPY Div Yld | Cur Yld Greater Than SPY Yld | 2.4% | 1.0 |
| P/E Ratio | Cur P/E Less Than 10 Yr Avg P/E | 21.9 | 0.0 |
| Relative P/E | Relative P/E Less Than 1.0 | 0.78 | 1.0 |
| Price to Sales | Less Than 1.5 | 3.07 | 0.0 |
| Total Ratio Score | 3.0 |
Canadian Shareowner’s Association Stock Selection Guide Software Buy Price
| Buy Zone |
Maybe Zone |
Sell Zone |
Current Price | Rating | Scoring (Buy=1.0, Other=0.0) |
| 1.0 |
TOTAL STOCK VALUATION SCORE: 4.0
SUMMARY
Points Earned:
10 out of 14 – half points are rounded down to be conservative
The stock is rated MEDIUM with 10 points earned through my analysis of the stock. This company has seen very strong revenue and EPS growth in the past number of years. However, it slips in the valuation department as it appears overpriced on a couple of the key metrics that I track. Although it appears to fall within the buy range of my screen, the other factors brought it down – including P/E compared to 10 year history, debt-to-equity, and price to sales. In fact, the price to sales ratio is way out of whack. I need to determine why this is. One other thing I don’t like is the declining ROE. Although it is above 15%, it has been steadily declining. I would rather see consistency here. At this time, as I do hold Pfizer I would not add Abbott to my portfolio.
| Rating | Points Required |
| High | 11+ points |
| Medium | 8-10 points |
| Low | < 8 points |
Reminder: This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
The Dividend Guy does not own shares in ABT
Even though I don’t completely understand your analysis method, your posts are always interesting and informative. Keep up the good work!
In the future, it would be great if you put the score next to the $$$ up top. It’s hard to count so many dollar signs.
wow 🙂
its very interesting point of view.
Good post.
realy good post
thank you 😉