Abbott Laboratories reports 68.3% Net Income decline while 1.3 pp EBITDA Margin growth from 21.3% to 22.6%
25 Jan 2017 • About Abbott Laboratories (
$ABT) • By InTwits
Abbott Laboratories reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Abbott Laboratories has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. At the same time it's in pair with industry average of 6.4%.
- CAPEX is quite volatile: 1,021 in 2016, 561 in 2015, 401 in 2014, 503 in 2013, 264 in 2012
- The company has business model with low profitability: ROIC is at 8.6%
- It operates with high leverage: Net Debt/EBITDA is 0.7x while industry average is -1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Abbott Laboratories ($ABT) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 21,494 | 19,657 | 20,247 | 20,405 | 20,853 | 2.2% |
| Gross Profit | 11,677 | 10,464 | 11,029 | 11,658 | 11,829 | 1.5% |
| SG&A | 7,444 | 6,372 | 6,530 | 6,785 | 6,672 | -1.7% |
| EBITDA | 4,676 | 3,852 | 4,147 | 4,339 | 4,703 | 8.4% |
| Net Income | 5,963 | 2,576 | 2,284 | 4,423 | 1,400 | -68.3% |
Balance Sheet
|
|---|
| Cash | 10,802 | 3,475 | 4,063 | 5,001 | 18,620 | 272.3% |
| Short Term Debt | 2,391 | 3,173 | 4,437 | 3,130 | 1,325 | -57.7% |
| Long Term Debt | 18,085 | 3,388 | 3,393 | 5,871 | 20,681 | 252.3% |
Cash flow
|
|---|
| Capex | 1,795 | 1,145 | 1,077 | 1,110 | 1,121 | 1.0% |
Ratios
|
|---|
| Revenue growth | -44.7% | -8.5% | 3.0% | 0.8% | 2.2% | |
| EBITDA growth | -46.8% | -17.6% | 7.7% | 4.6% | 8.4% | |
| Gross Margin | 54.3% | 53.2% | 54.5% | 57.1% | 56.7% | -0.4% |
| EBITDA Margin | 21.8% | 19.6% | 20.5% | 21.3% | 22.6% | 1.3% |
| Net Income Margin | 27.7% | 13.1% | 11.3% | 21.7% | 6.7% | -15.0% |
| SG&A, % of revenue | 34.6% | 32.4% | 32.3% | 33.3% | 32.0% | -1.3% |
| CAPEX, % of revenue | 8.4% | 5.8% | 5.3% | 5.4% | 5.4% | -0.1% |
| ROIC | 4.3% | 5.3% | 8.3% | 9.4% | 8.6% | -0.8% |
| ROE | 23.3% | 9.9% | 9.8% | 20.7% | 6.7% | -14.0% |
| Net Debt/EBITDA | 2.1x | 0.8x | 0.9x | 0.9x | 0.7x | -0.2x |
Revenue and profitability
The company's Revenue increased on 2.2% in 2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.63 pp from 24.1% to 24.7% in 2016.
Gross Margin showed almost no change in 2016. SG&A as a % of Revenue decreased slightly on 1.3 pp from 33.3% to 32.0% in 2016.
Net Income marign dropped on 15.0 pp from 21.7% to 6.7% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 5.4%. Abbott Laboratories's CAPEX/Revenue showed almost no change from 2013 to 2016. It's average CAPEX/Revenue for the last three years was 5.4%.
Return on investment
The company operates at low ROIC (8.58%) and ROE (6.71%). ROIC decreased slightly on 0.80 pp from 9.4% to 8.6% in 2016. ROE dropped on 14.0 pp from 20.7% to 6.7% in 2016.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 4.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 0.9x to 0.7x in 2016. Debt surged on 144% in 2016 while cash surged on 272% in 2016.
Valuation
Abbott Laboratories's trades at EV/EBITDA 0.9x and P/E 0.5x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 1.1x with the industry average at 19.0x.
Appendix 1: Peers in Health Care Equipment & Services
Below we provide Abbott Laboratories benchmarking against other companies in Health Care Equipment & Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Puricore ($PURI) | 11.3% | -33.6% | -45.5% | 36.5% | |
| Md Medical Group Invest ($MDMG) | 39.7% | 39.7% | 26.9% | 32.0% | |
| Tristel ($TSTL) | | -3.5% | 27.6% | 13.8% | 11.5% |
| Lifeline Scientific Inc ($LSIC) | 18.7% | 10.2% | 6.0% | 11.8% | |
| Synergy Health ($SYR) | 8.6% | 15.8% | 5.3% | 7.5% | |
| |
|---|
| Median (10 companies) | 11.3% | 7.0% | 5.7% | 5.9% | 5.3% |
|---|
| Abbott Laboratories ($ABT) | | -8.5% | 3.0% | 0.8% | 2.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Smith & Nephew ($SN.) | 74.1% | 74.7% | 74.8% | 75.3% | |
| Tristel ($TSTL) | 67.9% | 66.4% | 69.8% | 69.5% | 73.4% |
| Omega Diagnostics Group ($ODX) | 63.0% | 62.6% | 63.6% | 63.4% | 63.8% |
| Immunodiagnostic Systems Hldgs ($IDH) | 74.7% | 73.1% | 68.1% | 62.5% | 58.6% |
| Lifeline Scientific Inc ($LSIC) | 60.6% | 59.8% | 61.3% | 60.2% | |
| |
|---|
| Median (10 companies) | 57.8% | 55.6% | 56.6% | 54.5% | 63.8% |
|---|
| Abbott Laboratories ($ABT) | 54.3% | 53.2% | 54.5% | 57.1% | 56.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Md Medical Group Invest ($MDMG) | 41.7% | 28.0% | 28.9% | 27.9% | |
| Synergy Health ($SYR) | 26.0% | 26.4% | 25.8% | 24.3% | |
| Immunodiagnostic Systems Hldgs ($IDH) | | 35.3% | 34.1% | 23.6% | -77.1% |
| Smith & Nephew ($SN.) | 27.8% | 26.9% | 25.2% | 23.1% | |
| Tristel ($TSTL) | 17.0% | 13.7% | 20.1% | 22.9% | 20.7% |
| |
|---|
| Median (10 companies) | 17.0% | 14.9% | 19.1% | 20.3% | 10.2% |
|---|
| Abbott Laboratories ($ABT) | 21.8% | 19.6% | 20.5% | 21.3% | 22.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Synergy Health ($SYR) | 15.2% | 13.2% | 10.3% | 15.1% | |
| Md Medical Group Invest ($MDMG) | 65.2% | 42.8% | 43.4% | 8.2% | |
| Smith & Nephew ($SN.) | 6.4% | 7.8% | 8.1% | 7.7% | |
| Ekf Diagnostics Holdings ($EKF) | 3.7% | 3.7% | 2.8% | 7.6% | |
| Puricore ($PURI) | 2.4% | 3.2% | 15.4% | 7.3% | |
| |
|---|
| Median (10 companies) | 5.7% | 4.5% | 6.6% | 6.8% | 4.7% |
|---|
| Abbott Laboratories ($ABT) | 8.4% | 5.8% | 5.3% | 5.4% | 5.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lifeline Scientific Inc ($LSIC) | 1.9% | 11.2% | 11.7% | 24.0% | |
| Tristel ($TSTL) | 6.5% | 3.5% | 15.9% | 20.1% | 17.5% |
| Md Medical Group Invest ($MDMG) | 19.9% | 9.5% | 11.0% | 11.8% | |
| Smith & Nephew ($SN.) | 22.0% | 18.6% | 14.7% | 11.1% | |
| Synergy Health ($SYR) | 8.0% | 8.5% | 9.1% | 9.1% | |
| |
|---|
| Median (10 companies) | 6.5% | 7.9% | 10.0% | 6.7% | 3.3% |
|---|
| Abbott Laboratories ($ABT) | 4.3% | 5.3% | 8.3% | 9.4% | 8.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Synergy Health ($SYR) | 2.1x | 1.9x | 1.5x | 1.6x | |
| Smith & Nephew ($SN.) | 0.3x | 0.2x | 1.4x | 1.3x | |
| Md Medical Group Invest ($MDMG) | 0.2x | 0.2x | 2.0x | 0.6x | |
| Lifeline Scientific Inc ($LSIC) | -4.4x | -0.6x | -0.3x | -1.0x | |
| Omega Diagnostics Group ($ODX) | 0.1x | 0.7x | -1.8x | -1.0x | -0.7x |
| |
|---|
| Median (8 companies) | 0.1x | -0.2x | -0.3x | -1.0x | -1.2x |
|---|
| Abbott Laboratories ($ABT) | 2.1x | 0.8x | 0.9x | 0.9x | 0.7x |
