Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
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Highlights from the ratings report include:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.4%. Since the same quarter one year prior, revenues slightly increased by 4.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ABBOTT LABORATORIES's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $1,503.14 million or 7.26% when compared to the same quarter last year. Despite an increase in cash flow, ABBOTT LABORATORIES's average is still marginally south of the industry average growth rate of 8.16%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 40.44%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 35.29% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 34.6% when compared to the same quarter one year ago, falling from $1,618.67 million to $1,058.38 million.
Abbott Laboratories engages in the discovery, development, manufacture, and sale of health care products worldwide. Abbott has a market cap of $53.09 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 9.1, below the S&P 500 P/E ratio of 17.7. Shares are up 4.9% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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