ABBOTT LABORATORIES (NYSE:ABT) – A Quality Stock Worth Considering

ABBOTT LABORATORIES (NYSE:ABT) stands out as a strong candidate for quality investors, meeting key criteria for long-term growth, profitability, and financial health. The company’s fundamentals align well with the Caviar Cruise screening strategy, which focuses on identifying high-quality businesses with sustainable competitive advantages.

Key Strengths of ABT

• Revenue and EBIT Growth: Over the past five years, ABT has delivered consistent revenue growth (5Y CAGR of 7.19%) and EBIT growth (5Y CAGR of 8.41%). This demonstrates the company’s ability to expand its operations while improving profitability.

• High Return on Invested Capital (ROIC): ABT’s ROIC (excluding cash and goodwill) stands at 19.85%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.

• Strong Profit Quality: With a five-year average profit quality of 99.60%, ABT converts nearly all its net income into free cash flow—a sign of financial efficiency and reliability.

• Manageable Debt Levels: The company’s debt-to-free cash flow ratio is 1.99, meaning it could repay its debt in under two years using current cash flows. This reflects a conservative financial structure.

Fundamental Analysis Highlights

Abbott Laboratories holds a solid fundamental rating of 7 out of 10, with standout scores in profitability (8/10) and financial health (8/10). Key takeaways include:

• Profitability: ABT outperforms most peers in return on assets (16.58%) and return on equity (27.66%). Margins have improved over time, reinforcing its competitive position.
• Dividend Reliability: The company has raised its dividend for at least 10 consecutive years, with an 11.40% average annual growth rate.
• Valuation: While not cheap, ABT trades at a reasonable valuation relative to industry peers, supported by strong earnings growth expectations.

For investors seeking stable, high-quality businesses, ABT presents a compelling case.

Our Caviar Cruise screener lists more quality stocks and is updated regularly.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.