Is Becton, Dickinson and Co (BDX) Stock Modestly Overvalued? An In-Depth Analysis

As of July 24, 2023, Becton, Dickinson and Co (

BDX, Financial) stock has experienced a significant daily gain of 7.12%, with a current price of $283.69. This global leader in medical surgical products, diagnostic instruments, and flow cytometry systems boasts a market cap of $80.6 billion and sales of $18.8 billion. However, the GuruFocus valuation method indicates that Becton, Dickinson and Co’s stock might be modestly overvalued with a GF Value of $254.35.

Becton, Dickinson and Co, accounting for 24% of BD Interventional (formerly Bard business) revenue, has a considerable international presence, contributing 43% to the company’s total business. With a long history of leadership in the medical devices and instruments industry, Becton, Dickinson and Co’s financial metrics and GF Value require a closer examination.

GF Value of Becton, Dickinson and Co

The GF Value, calculated based on historical trading multiples, GuruFocus’ adjustment factor, and future business performance estimates, suggests that Becton, Dickinson and Co’s stock may be modestly overvalued at the current price of $283.69 per share. This overvaluation might result in lower long-term returns than the company’s business growth.

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Financial Strength and Profitability

Before investing, it’s crucial to assess a company’s financial strength. Becton, Dickinson and Co’s cash-to-debt ratio of 0.11, which is lower than 92.46% of companies in the Medical Devices & Instruments industry, indicates fair financial strength. The company has been profitable over the past 10 years, with an operating margin of 13.16%, better than 71.2% of industry competitors.

Company Growth

The 3-year average annual revenue growth of Becton, Dickinson and Co is 1.4%, ranking lower than 67.08% of companies in the industry. Its 3-year average EBITDA growth rate is 1.2%, which also ranks lower than 61.69% of industry competitors. This slower growth rate can impact the company’s valuation.

ROIC vs. WACC

Comparing a company’s return on invested capital (ROIC) and the weighted average cost of capital (WACC) provides insight into its profitability. Becton, Dickinson and Co’s ROIC is 5, slightly lower than its WACC of 5.3.

Conclusion

Despite its strong profitability and fair financial condition, Becton, Dickinson and Co’s stock appears to be modestly overvalued. Its slower growth rate compared to industry peers may impact future returns. For a more detailed analysis, you can explore Becton, Dickinson and Co’s 30-Year Financials here.

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