Is There More Room For Growth In Becton Dickinson Stock?

BDX: Becton Dickinson and company logo
BDX
Becton Dickinson and company

Becton Dickinson stock (NYSE: BDX) has seen a 7% fall this year, faring better than the broader S&P500 index, down 17%. However, in the longer term, BDX stock is down 14% from levels seen in late 2019, underperforming the S&P 500 index, up around 22%.

This 14% fall for BDX stock since late 2019 can primarily be attributed to 1. the company’s P/S ratio falling 17% to 3.6x trailing revenues, from 4.3x in 2019, 2. a 5% rise in its total shares outstanding to 287 million, partly offset by 3. Becton Dickinson’s revenue growth of 9% to $18.9 billion over the last twelve months, compared to $17.3 billion in 2019. Higher revenues and shares outstanding have meant that its revenue per share rose just 4% to $65.67 now, compared to $62.92 in 2019.

Becton Dickinson’s revenue growth over the recent past has been aided by its Covid-19 diagnostic tests and the increased demand for its medical delivery solutions and pharmaceuticals systems, primarily pre-filled devices. Earlier this year, the company completed the spin-off of its diabetes business, which is now listed as a separate entity – Embecta (NASDAQ: EMBC) – on the Nasdaq stock exchange. A revenue decline in fiscal 2022 can be attributed to lower diagnostics sales, given a fall in demand for Covid-19 tests and foreign exchange headwinds.

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Not only did the company see its revenue rise over the recent years, but its operating margin has also risen to 16.2% now, vs. 13.9% in 2019. Our Becton Dickinson Operating Income Comparison dashboard has more details.

BDX stock has risen 4% in a week after an Illinois jury found that Sotera Health – a rival sterilization services provider – was not liable for causing a woman’s cancer. Becton Dickinson is also facing lawsuits alleging that its sterilization facility’s emissions of EtO which has been linked to serious and potentially life-threatening injuries. This development boded well, with the investors hoping for a similar outcome for Becton Dickinson as well.

Despite the underperformance of BDX stock over the recent years, we believe it has only a little room for growth. At its current levels of around $235, it is trading at 3.6x its forward expected revenue of about $65.35 per share, compared to its last four-year average of 3.9x, implying only a little room for growth.

While BDX stock looks like it has only a little room for growth, it is helpful to see how Becton Dickinson’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis and recent market volatility have created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Novanta vs. Abbott.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BDX Return -1% -7% 42%
 S&P 500 Return 2% -17% 76%
 Trefis Multi-Strategy Portfolio 2% -21% 213%

[1] Month-to-date and year-to-date as of 11/22/2022
[2] Cumulative total returns since the end of 2016

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