QUEST DIAGNOSTICS INC (DGX) Stock Fundamental Analysis
NYSE:DGX - New York Stock Exchange, Inc. - US74834L1008 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to DGX. DGX was compared to 103 industry peers in the Health Care Providers & Services industry. DGX has an excellent profitability rating, but there are some minor concerns on its financial health. DGX is not valued too expensively and it also shows a decent growth rate. Finally DGX also has an excellent dividend rating. These ratings would make DGX suitable for dividend investing!
1. Profitability
1.1 Basic Checks
In the past year DGX was profitable.
DGX had a positive operating cash flow in the past year.
Each year in the past 5 years DGX has been profitable.
Each year in the past 5 years DGX had a positive operating cash flow.
1.2 Ratios
The Return On Assets of DGX (5.65%) is better than 81.55% of its industry peers.
DGX has a better Return On Equity (12.87%) than 81.55% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.86%, DGX is in the better half of the industry, outperforming 74.76% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for DGX is in line with the industry average of 9.71%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.65% | ||
| ROE | 12.87% | ||
| ROIC | 7.86% |
ROA(3y)6.25%
ROA(5y)8.71%
ROE(3y)14.08%
ROE(5y)18.83%
ROIC(3y)8.77%
ROIC(5y)10.97%
1.3 Margins
DGX has a Profit Margin of 8.78%. This is amongst the best in the industry. DGX outperforms 91.26% of its industry peers.
DGX's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 14.35%, DGX belongs to the best of the industry, outperforming 85.44% of the companies in the same industry.
In the last couple of years the Operating Margin of DGX has declined.
The Gross Margin of DGX (33.15%) is better than 61.16% of its industry peers.
DGX's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.35% | ||
| PM (TTM) | 8.78% | ||
| GM | 33.15% |
OM growth 3Y-14.9%
OM growth 5Y-3.56%
PM growth 3Y-21.92%
PM growth 5Y-4.54%
GM growth 3Y-5.79%
GM growth 5Y-1.22%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so DGX is still creating some value.
Compared to 1 year ago, DGX has about the same amount of shares outstanding.
DGX has less shares outstanding than it did 5 years ago.
DGX has a worse debt/assets ratio than last year.
2.2 Solvency
DGX has an Altman-Z score of 3.11. This indicates that DGX is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 3.11, DGX is doing good in the industry, outperforming 66.99% of the companies in the same industry.
The Debt to FCF ratio of DGX is 5.55, which is a neutral value as it means it would take DGX, 5.55 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of DGX (5.55) is better than 63.11% of its industry peers.
A Debt/Equity ratio of 0.85 indicates that DGX is somewhat dependend on debt financing.
DGX has a Debt to Equity ratio (0.85) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.85 | ||
| Debt/FCF | 5.55 | ||
| Altman-Z | 3.11 |
ROIC/WACC0.99
WACC7.94%
2.3 Liquidity
DGX has a Current Ratio of 1.44. This is a normal value and indicates that DGX is financially healthy and should not expect problems in meeting its short term obligations.
DGX's Current ratio of 1.44 is in line compared to the rest of the industry. DGX outperforms 48.54% of its industry peers.
A Quick Ratio of 1.31 indicates that DGX should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.31, DGX perfoms like the industry average, outperforming 47.57% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.44 | ||
| Quick Ratio | 1.31 |
3. Growth
3.1 Past
DGX shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.51%.
The Earnings Per Share has been growing slightly by 6.58% on average over the past years.
The Revenue has grown by 9.38% in the past year. This is quite good.
Measured over the past years, DGX shows a small growth in Revenue. The Revenue has been growing by 5.02% on average per year.
EPS 1Y (TTM)5.51%
EPS 3Y-14.1%
EPS 5Y6.58%
EPS Q2Q%8.33%
Revenue 1Y (TTM)9.38%
Revenue growth 3Y-2.91%
Revenue growth 5Y5.02%
Sales Q2Q%12.09%
3.2 Future
The Earnings Per Share is expected to grow by 8.57% on average over the next years. This is quite good.
DGX is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.61% yearly.
EPS Next Y8.57%
EPS Next 2Y8.48%
EPS Next 3Y8.31%
EPS Next 5Y8.57%
Revenue Next Year9.72%
Revenue Next 2Y6.8%
Revenue Next 3Y5.76%
Revenue Next 5Y4.61%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 18.29, which indicates a rather expensive current valuation of DGX.
DGX's Price/Earnings ratio is a bit cheaper when compared to the industry. DGX is cheaper than 71.84% of the companies in the same industry.
When comparing the Price/Earnings ratio of DGX to the average of the S&P500 Index (27.30), we can say DGX is valued slightly cheaper.
DGX is valuated correctly with a Price/Forward Earnings ratio of 15.84.
Based on the Price/Forward Earnings ratio, DGX is valued a bit cheaper than 71.84% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of DGX to the average of the S&P500 Index (21.76), we can say DGX is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.29 | ||
| Fwd PE | 15.84 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DGX is valued a bit cheaper than 60.19% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, DGX is valued a bit cheaper than 67.96% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.77 | ||
| EV/EBITDA | 12.37 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates DGX does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of DGX may justify a higher PE ratio.
PEG (NY)2.13
PEG (5Y)2.78
EPS Next 2Y8.48%
EPS Next 3Y8.31%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.87%, DGX has a reasonable but not impressive dividend return.
DGX's Dividend Yield is rather good when compared to the industry average which is at 2.50. DGX pays more dividend than 89.32% of the companies in the same industry.
Compared to the average S&P500 Dividend Yield of 2.35, DGX is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.87% |
5.2 History
On average, the dividend of DGX grows each year by 6.92%, which is quite nice.
DGX has been paying a dividend for at least 10 years, so it has a reliable track record.
DGX has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)6.92%
Div Incr Years13
Div Non Decr Years20
5.3 Sustainability
37.67% of the earnings are spent on dividend by DGX. This is a low number and sustainable payout ratio.
DGX's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP37.67%
EPS Next 2Y8.48%
EPS Next 3Y8.31%
168.09
-3.36 (-1.96%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Providers & Services
Earnings (Last)
Earnings (Next)
Inst Owners95.88%
Inst Owner Change0%
Ins Owners0.31%
Ins Owner Change2.1%
Market Cap18.77B
Analysts76.67
Price Target188.3 (12.02%)
Short Float %3.27%
Short Ratio3.3
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.87% |
Yearly Dividend2.98
Dividend Growth(5Y)6.92%
DP37.67%
Div Incr Years13
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.63%
Min EPS beat(2)1.7%
Max EPS beat(2)5.56%
EPS beat(4)3
Avg EPS beat(4)1.9%
Min EPS beat(4)-0.44%
Max EPS beat(4)5.56%
EPS beat(8)7
Avg EPS beat(8)2.26%
EPS beat(12)11
Avg EPS beat(12)2.63%
EPS beat(16)15
Avg EPS beat(16)5.52%
Revenue beat(2)1
Avg Revenue beat(2)0.25%
Min Revenue beat(2)-0.15%
Max Revenue beat(2)0.65%
Revenue beat(4)2
Avg Revenue beat(4)0.37%
Min Revenue beat(4)-0.7%
Max Revenue beat(4)1.68%
Revenue beat(8)6
Avg Revenue beat(8)0.89%
Revenue beat(12)10
Avg Revenue beat(12)1.92%
Revenue beat(16)13
Avg Revenue beat(16)2.59%
PT rev (1m)0%
PT rev (3m)3.38%
EPS NQ rev (1m)-0.04%
EPS NQ rev (3m)0.59%
EPS NY rev (1m)-0.02%
EPS NY rev (3m)0.07%
Revenue NQ rev (1m)-0.07%
Revenue NQ rev (3m)1.32%
Revenue NY rev (1m)-0.03%
Revenue NY rev (3m)0.06%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.29 | ||
| Fwd PE | 15.84 | ||
| P/S | 1.85 | ||
| P/FCF | 17.77 | ||
| P/OCF | 12.56 | ||
| P/B | 2.71 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.37 |
EPS(TTM)9.19
EY5.47%
EPS(NY)10.61
Fwd EY6.31%
FCF(TTM)9.46
FCFY5.63%
OCF(TTM)13.38
OCFY7.96%
SpS90.99
BVpS62.07
TBVpS-32.65
PEG (NY)2.13
PEG (5Y)2.78
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.65% | ||
| ROE | 12.87% | ||
| ROCE | 10.16% | ||
| ROIC | 7.86% | ||
| ROICexc | 7.97% | ||
| ROICexgc | 31.4% | ||
| OM | 14.35% | ||
| PM (TTM) | 8.78% | ||
| GM | 33.15% | ||
| FCFM | 10.4% |
ROA(3y)6.25%
ROA(5y)8.71%
ROE(3y)14.08%
ROE(5y)18.83%
ROIC(3y)8.77%
ROIC(5y)10.97%
ROICexc(3y)9.13%
ROICexc(5y)11.7%
ROICexgc(3y)38.8%
ROICexgc(5y)46.51%
ROCE(3y)11.44%
ROCE(5y)14.33%
ROICexcg growth 3Y-18.68%
ROICexcg growth 5Y-6.38%
ROICexc growth 3Y-22.78%
ROICexc growth 5Y-5.24%
OM growth 3Y-14.9%
OM growth 5Y-3.56%
PM growth 3Y-21.92%
PM growth 5Y-4.54%
GM growth 3Y-5.79%
GM growth 5Y-1.22%
F-Score6
Asset Turnover0.64
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.85 | ||
| Debt/FCF | 5.55 | ||
| Debt/EBITDA | 2.97 | ||
| Cap/Depr | 84.72% | ||
| Cap/Sales | 4.31% | ||
| Interest Coverage | 5.83 | ||
| Cash Conversion | 75.65% | ||
| Profit Quality | 118.39% | ||
| Current Ratio | 1.44 | ||
| Quick Ratio | 1.31 | ||
| Altman-Z | 3.11 |
F-Score6
WACC7.94%
ROIC/WACC0.99
Cap/Depr(3y)90.53%
Cap/Depr(5y)97.23%
Cap/Sales(3y)4.27%
Cap/Sales(5y)4.19%
Profit Quality(3y)115.37%
Profit Quality(5y)109.91%
High Growth Momentum
Growth
EPS 1Y (TTM)5.51%
EPS 3Y-14.1%
EPS 5Y6.58%
EPS Q2Q%8.33%
EPS Next Y8.57%
EPS Next 2Y8.48%
EPS Next 3Y8.31%
EPS Next 5Y8.57%
Revenue 1Y (TTM)9.38%
Revenue growth 3Y-2.91%
Revenue growth 5Y5.02%
Sales Q2Q%12.09%
Revenue Next Year9.72%
Revenue Next 2Y6.8%
Revenue Next 3Y5.76%
Revenue Next 5Y4.61%
EBIT growth 1Y11.38%
EBIT growth 3Y-17.38%
EBIT growth 5Y1.28%
EBIT Next Year43.06%
EBIT Next 3Y16.89%
EBIT Next 5YN/A
FCF growth 1Y22.22%
FCF growth 3Y-20.8%
FCF growth 5Y1.52%
OCF growth 1Y12.16%
OCF growth 3Y-15.78%
OCF growth 5Y1.42%