To determine whether a company is one of the best stocks to buy now requires a detailed analysis of that company. In our “In Focus” reports we perform a more detailed analysis of one of the roughly 2,000 companies we follow. In this report, we will be covering Abbott Laboratories.
Abbott Laboratories (ABT) develops, manufactures, markets, and sells a diversified line of healthcare products. At the end of 2014, it had four business segments: Established Pharmaceutical Products, Nutritional Products, Diagnostic Products, and Vascular Products.
Abbott Laboratories is located in Abbott Park, Illinois. But it has a worldwide presence and does business in over 150 countries.
Analyzing a firm that goes through a major spinoff is a little tricky since it is hard to determine what performance to attribute to what part of the company. It is for this reason that analyzing ABT is a little more difficult than the average company since it spun off its pharmaceutical operation, AbbVie, in 2013. But we believe we can make the following points.
Despite ABT’s somewhat modest equity-asset ratio (0.461), its financial strength is excellent. Its worldwide presence, diversified customer base, and diversified product lines allow it to use more leverage than the average company. Consequently ABT possesses one of the strongest balance sheets of any company we follow.
ABT’s has experienced (and will probably continue to experience) relatively low and modest growth in sales and profits. ABT excels in the reliability with which it has achieved this growth. It is also reliably cash flow and free cash flow positive.
If we had to sum up ABT as succinctly as possible, we would say it is a very safe company with very little profit potential. It is the proverbial low-risk/low-return investment. It is an excellent choice if you are a risk-averse investor who wants a rock-solid dividend. It is only an average investment, if you are slightly more demanding.
Stat Sheet – Abbott Laboratories 4/29/16
|Industry||Biotechnology & Drugs|
|Market Cap||$ 58,174|
|Financial Strength||Above Average|
|Growth Prospects||Below Average|
|Price Volatility||Below Average|
(Our assessment of this firm’s fundamentals will be in effect for the rest of calendar year 2016.)
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