Are You Overpaying For Abbott Stock Versus Its Rivals?

For questions about this article or underlying research, email help@trefis.com.

At 42.6 times earnings, Abbott Laboratories (ABT) stock costs more for each dollar of profit than any of five peers, from Johnson & Johnson to Boston Scientific. Abbott also posts the fastest sales growth of the six, at 10.0% over its latest four quarters. Part of that growth comes from Exact Sciences, which Abbott bought in March 2026. Yet the company keeps the smallest share of its sales as operating profit. So how much of that higher price do you pay for the faster growth?

Abbott Costs Far More Than Medtronic For Similar Growth

Little of it, judging by Medtronic, a peer in the same health care equipment industry. Over its four quarters to July 31, 2026, Medtronic grew sales 9.8%, coming in almost level with Abbott. Its shares trade at 25.7 times earnings, though, placing them well below Abbott’s. The difference shows up in profit. Medtronic keeps 19.0% of its sales as operating profit, against 13.8% for Abbott, the lowest in the group.

Here is how a P/E climbs when the margin is thin. Consider two companies priced the same against their sales. If one keeps half as much of each sales dollar as profit, you pay twice as much for each dollar of its profit. Abbott’s market value stands at about 4.1 times its sales, compared with about 6.7 times for Johnson & Johnson. Danaher and Thermo Fisher Scientific also cost more than Abbott on that measure. So you pay a middling price for Abbott’s sales but the top price in the group for its profit.

Abbott Grows On Devices But Reports Thin Profits

Medical Devices stands as Abbott’s largest business, generating $21.4 billion of sales in fiscal 2025, up 12.6% from the year before. During the third quarter of fiscal 2026, management pointed to rising use of its new Volt PFA catheter and of AVEIR, its leadless pacemaker. Abbott’s growth lead rests on reported sales, which include Exact Sciences, the cancer-test maker it bought on March 23, 2026. Third-quarter sales rose 14.5% as reported, but 7.0% on the comparable basis management uses, which counts Exact Sciences in both years.

Profit has moved the other way on those reported figures. Abbott posted an operating margin of 10.4% in the third quarter of fiscal 2026, down from 18.1% in the same quarter a year earlier. On management’s own adjusted measure, the third-quarter operating margin stood at 23.4%, up 40 basis points. Earnings per share reflect the same split, coming in at $0.53 reported for the quarter against $1.42 adjusted. Abbott’s P/E is measured on reported earnings, the lower of the two.

What Abbott Expects On Sales And Profit

On October 21, 2026, Abbott kept its fiscal 2026 forecast for adjusted earnings per share at $5.50 to $5.55. The company lowered its forecast for comparable sales growth to 6.0%, from 7.0%. Management tied the cut to price moves abroad in diabetes care and to slower U.S. orders for a heart device as customers waited for a new Abbott product. It expects manufacturing cost programs to offset the margin hit in diabetes.

Abbott also plans to spin off its nutrition business, which accounts for about $8.5 billion of yearly sales, by the end of 2027. Management said Abbott without nutrition would carry an operating margin about 100 basis points higher. The separation costs will be left out of adjusted earnings, so they will show up in the reported earnings behind Abbott’s P/E.

The stock price appears to assume that Abbott keeps its growth lead and that its reported margin climbs toward its peers’. So far, Abbott maintains the growth lead on reported sales, but its reported margin in the third quarter was lower than in any of the four quarters before it. Abbott’s reported operating margin is the figure to watch when the company reports again in January 2027.

Paid In Abbott Laboratories Stock?

Many readers of a Abbott Laboratories article work there and own its stock through grants or a purchase plan. When your paycheck and your savings depend on the same company, one bad year can hit both. Our partner advisory firm offers a free strategy review of ways to protect a large company-stock position and sell it down with less tax.

Request A Free Strategy Review

Spot an error or want more like this? Tell us in 10 seconds.