Is the New Abbot a Winner?

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With shares of Abbott Laboratories (NYSE:ABT) trading at around $35.31, is ABT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The spinoff of AbbVie Inc. (ABBV) has left many investors unsure about Abbott’s future potential. Abbot still operates in four segments: Diagnostic Products, Vascular Products. Nutritional Products, and Established Pharmaceutical Products. Abbott Laboratories also offers blood glucose monitoring meters, test strips, and data management software and accessories for people with diabetes; and medical devices for the eye, including cataract surgery, LASIK surgery, contact lens care products, and dry eye products.

Abbott has a lot going for it at the moment, including:

  • Strong margins
  • Good cash flow
  • Exposure to the increasingly popular generics market
  • Diversification of sales across the world
  • Increase in cash position
  • 357 consecutive quarterly dividends
  • Launching Xience Xpedition drug-eluting stent this year
  • PLEX-ID System has potential to reduce antibiotic prescriptions
  • An FY2013 EPS expectation of $1.98 to $2.04 (remember, this is post-spinoff)
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The chart below will compare fundamentals for Abbott, Eli Lilly and Company (NYSE:LLY) and Johnson & Johnson (NYSE:JNJ). Abbott and Eli Lilly are similar in size; Johnson & Johnson is a much larger company. Abbott has a market cap of $55.29 billion, Eli Lilly has a market cap of $61.89 billion, and Johnson & Johnson has a market cap of $228.57 billion.

ABT

LLY

JNJ

Trailing   P/E

9.47

15.47

21.19

Forward   P/E

15.59

20.22

14.20

Profit   Margin

14.95%

18.09%

16.15%

ROE

23.23%

28.89%

17.25%

Operating   Cash Flow

$9.31 Billion

$5.30 Billion

 $15.40 Billion

Dividend   Yield

1.60%

3.50%

3.00%

Short   Position

1.10%

N/A

3.60%

 

Abbott currently has a good valuation and a 1.60 percent yield. Let’s take a look at some more important numbers prior to forming an opinion on this stock.

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