It hasn't been a great morning session for Baxter International investors, who have watched their shares sink by -2.3% to a price of $23.3. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Baxter International's Valuation Is in Line With Its Sector Averages:
Baxter International Inc., through its subsidiaries, provides a portfolio of healthcare products in the United States. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 22.94 and an average price to book (P/B) ratio of 3.19. In contrast, Baxter International has a trailing 12 month P/E ratio of -48.6 and a P/B ratio of 1.63.
Baxter International has moved -33.3% over the last year compared to 17.9% for the S&P 500 — a difference of -51.2%. Baxter International has a 52 week high of $38.28 and a 52 week low of $21.33.
The Company's Revenues Are Declining:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $11,362 | $11,673 | $12,146 | $10,057 | $10,360 | $10,636 |
| Gross Margins | 42% | 39% | 39% | 35% | 40% | 37% |
| Net Margins | 9% | 9% | 11% | -24% | 26% | -6% |
| Net Income (M) | $1,001 | $1,102 | $1,284 | -$2,433 | $2,656 | -$649 |
| Net Interest Expense (M) | -$71 | -$134 | -$193 | -$395 | -$442 | -$341 |
| Depreciation & Amort. (M) | $789 | $823 | $867 | $1,072 | $984 | $259 |
| Diluted Shares (M) | 519 | 517 | 508 | 504 | 508 | 510 |
| Earnings Per Share | $1.93 | $2.13 | $2.53 | -$4.83 | $5.23 | -$1.27 |
| EPS Growth | n/a | 10.36% | 18.78% | -290.91% | 208.28% | -124.28% |
| Avg. Price | $74.89 | $79.88 | $77.58 | $75.43 | $38.66 | $23.86 |
| P/E Ratio | 38.02 | 36.81 | 30.3 | -15.62 | 7.36 | -18.79 |
| Free Cash Flow (M) | $1,408 | $1,159 | $1,531 | $834 | $1,294 | $573 |
| CAPEX (M) | $696 | $709 | $691 | $377 | $432 | $446 |
| EV / EBITDA | 15.69 | 17.81 | 24.45 | -30.5 | 19.49 | 88.49 |
| Total Debt (M) | $5,124 | $6,639 | $17,964 | $17,807 | $16,523 | $13,806 |
| Net Debt / EBITDA | 0.7 | 1.19 | 6.77 | -9.13 | 7.95 | 44.11 |
| Current Ratio | 2.32 | 2.52 | 2.09 | 1.69 | 1.48 | 1.36 |
Baxter International suffers from declining revenues and decreasing reinvestment in the business, slimmer gross margins than its peers, and declining EPS growth. The firm's financial statements also exhibit positive cash flows and a highly leveraged balance sheet. Baxter International has just enough current assets to cover current liabilities, as shown by its current ratio of 1.36.
