Abbott Labs (ABT): A Steadfast ‘Aristocrat’ in Uncertain Times

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Abbott Laboratories (NYSE:ABT), a pharmaceutical and medical device maker based in Abbott Park, Illinois, combines the best of both worlds: it’s a growth stock but also a “dividend aristocrat” that belongs in any income portfolio.

Abbott Laboratories NYSE:ABTThe Aristocrat Index is maintained by Standard & Poor’s, which every December updates the list of companies that make the grade. To earn the honorific, a company must be a member of the S&P 500 index, have boosted its regular quarterly dividends for 25 consecutive years, boast a market capitalization of at least $3 billion and have an average daily value traded of at least $5 million over the last three months.

Last month, ABT once again passed muster.

ABT’s growth-and-income credentials were further burnished this morning before the market’s opening bell, when the company reported strong fourth-quarter fiscal 2014 earnings that beat Wall Street’s expectations.

A dividend aristocrat is typically a large-cap blue chip company with a robust balance sheet. With a market cap of $65.4 billion and a dividend yield of 2.2%, ABT serves customers in more than 150 countries and employs approximately 69,000 full-time people.

Abbott Labs operates across four business divisions: branded generics, medical devices, diagnostics and nutrition. Abbott offers a diversified variety of medical devices and diagnostic tests used globally by doctors’ offices, health clinics, hospitals, laboratories and blood banks to diagnose and treat diseases such as cancer, HIV, hepatitis, heart failure and metabolic disorders.

ABT also provides point-of-care cardiac diagnostic tests for emergency rooms.

Abbott Labs’ competitors include such huge players as Merck & Co., Inc. (NYSE:MRK) and Sanofi SA (ADR) (NYSE:SNY). However, through its portfolio of medical devices and eye care treatments, ABT is better positioned to exploit the rising use of devices and the growing incidence of eye disease around the world.

The opportunities in these two segments are especially large in the U.S. as Obamacare increases coverage for device and ophthalmic products.

ABT Earnings Exceed Expectations

Abbott Labs today reported fourth-quarter earnings of $905 million, or earnings per share of 59 cents, an increase from $589 million, or EPS of 37 cents, in the same period a year ago.

Adjusted for one-time gains and costs, fourth-quarter EPS came in at 71 cents, beating Wall Street’s expectations. Revenue in the quarter came in at more than $5.3 billion, a year-over-year gain of 5.6% but slightly missing analysts’ projections of $5.5 billion, due to lagging sales in the company’s nutrition segment.

For the full fiscal year, ABT reported earnings of $2.3 billion, or EPS of $1.49, on revenue of $20.2 billion.

For full year 2015, Abbott management gave guidance of EPS in the range of $2.10 to $2.20, compared with analysts’ consensus of $2.18.

Over the last 12 months, ABT stock has risen 19%. Since the beginning of the year, the stock has fallen nearly 4%, roughly in line with the decline of the S&P 500.

Bottom Line

As one the globe’s largest producers of prescription drugs, diagnostic tests and vision care products, Abbott Labs should continue to benefit from an older and sicker population in developed as well as developing countries. ABT has boosted dividends for 25 years in a row and its stock has plenty of room for growth in 2015.

That’s an attractive investment package in today’s increasingly uncertain environment.

As of this writing, John Persinos did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/abbott-labs-abt-steadfast-aristocrat-uncertain-times/.

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