Today we're going to take a closer look at large-cap Industrials company Thermo Fisher Scientific, whose shares are currently trading at $520.38. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Thermo Fisher Scientific's Valuation Is in Line With Its Sector Averages:
Thermo Fisher Scientific Inc. provides life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and biopharma services in the United States and internationally. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Thermo Fisher Scientific has a trailing 12 month P/E ratio of 34.1 and a P/B ratio of 4.44.
Thermo Fisher Scientific's PEG ratio is 11.52, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $24,358 | $25,542 | $32,218 | $39,211 | $44,915 | $43,421 |
| Revenue Growth | n/a | 4.86% | 26.14% | 21.71% | 14.55% | -3.33% |
| Operating Margins | 16% | 18% | 24% | 26% | 19% | 16% |
| Net Margins | 12% | 14% | 20% | 20% | 15% | 14% |
| Net Income (MM) | $2,938 | $3,696 | $6,375 | $7,728 | $6,960 | $5,941 |
| Earnings Per Share | $7.24 | $9.17 | $15.96 | $19.46 | $17.63 | $15.26 |
| EPS Growth | n/a | 26.66% | 74.05% | 21.93% | -9.4% | -13.44% |
| Diluted Shares (MM) | 406 | 403 | 399 | 397 | 394 | 374 |
| Free Cash Flow (MM) | $3,785 | $4,047 | $6,815 | $6,789 | $6,911 | $6,546 |
| Capital Expenditures (MM) | $758 | $926 | $1,474 | $2,523 | $2,243 | $1,624 |
| Current Ratio | 1.73 | 1.92 | 2.13 | 1.5 | 1.48 | 1.63 |
| Total Debt (MM) | $18,990 | $17,752 | $21,735 | $34,870 | $34,488 | $35,284 |
| Net Debt / EBITDA | 2.79 | 2.43 | 1.2 | 2.58 | 2.41 | 3.15 |
Thermo Fisher Scientific has growing revenues and increasing reinvestment in the business and decent operating margins with a stable trend. Additionally, the company's financial statements display a strong EPS growth trend and irregular cash flows. Furthermore, Thermo Fisher Scientific has significant leverage.
