Industry : Medical Appliances & Equipment

 

Business :

Becton, Dickinson and Company (BDX) is a medical technology company engaged principally in the development, manufacture and sale of a range of medical supplies, devices, instrument systems and reagents used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. BD’s operations consist of three business segments: BD Medical, BD Diagnostics and BD Biosciences. On November 19, 2009, BD acquired 100% of HandyLab, Inc. (HandyLab), a company that develops and manufactures molecular diagnostic assays and automation platforms.

 

 

As a whole, BDX is a company that sells a broad range of medical supplies, devices, laboratory equipment and diagnostic products.

BDX's operates its business between 3 business segments:-

BD Medical is among the world's leading suppliers of medical devices and a leading innovator in injection- and infusion-based drug delivery since 1906, when the Company built the first-ever facility in the U.S. to manufacture needles and syringes. The BD Medical segment is focused on providing innovative solutions to reduce the spread of infection, enhance diabetes treatment, advance drug delivery and improve ophthalmic surgery outcomes.

BD Diagnostics is a leading provider of products for the safe collection and transport of diagnostics specimens, as well as instruments and reagent systems to accurately detect a broad range of infectious diseases, healthcare-associated infections (HAIs) and cancers. The BD Diagnostics segment focuses on improving health outcomes for patients by providing laboratories with solutions that improve quality, enhance laboratory system productivity and inform medical decisions.

BD Biosciences is a world leader in bringing innovative diagnostic and research tools to life scientists, clinical researchers, laboratory professionals and clinicians who are involved in basic research, drug discovery and development, biopharmaceutical production and disease management. The BD Biosciences segment is focused on continually advancing the science and applications associated with cellular analysis and products that help grow living cells and tissue.
 

Well, a fair enough quite easy-to-understand company, which falls within my circle of competence and comfort zone.

 

Let's take a look at it's Financial Metrics.

 

A quick inspection on the moat by looking at it's ROA, ROE, FCF, Net Margin:-

10 year average ROA	11%
10 year average ROE	20%
10 year average Net Margin	12%
10 year average FCF growth	18%

Quite a respectable feat, and I would say that this company definitely have some sort of moat with these numbers.

 

Growth Rates:-

10 year average Revenue growth	7.7%
10 year average EPS growth	15%

 

I'm estimating a consistent growth rate of 12% on it's EPS.

With it's current EPS at $5.13, and a Dividend payment ~~ 26% of it's net earnings, this is the MOS calculation we got:-

Current EPS	Expected Growth	PE	Expected Return	Future EPS	Future Price	Div(%)	Total Div Paid
$5.13	12%	24	15%	$15.93	$382.39	26%	$23.41

	IntrinsicValue	20%MOS	30%MOS	40%MOS	50%MOS	Est. Yr 10 Div
No Div	$94.52	$75.62	$66.16	$56.71	$47.26	$4.14
With Div	$100.31	$80.25	$70.22	$60.19	$50.16	$4.14

 

We come to an estimated Intrinsic Value of ~~ $100 for BDX.

At the current trading price of $75 as of this writing, we would have gotten a 20% MOS.

I'd be looking at this closely. I'd be more comfortable at getting this stock if it were able to give me around a 30% Margin Of Safety.

 

 

 

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