Abbott and its peers
Pharmaceutical and healthcare companies are capital intensive. At times, they have high debt on their balance sheets stemming from acquisitions and joint ventures.
EV/EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) is often used to value capital-intensive companies. The above chart compares the forward enterprise multiple trend for five years for Abbott and the industry.
The PE (price-to-earnings) multiple is one of the simplest multiples used for valuations. The forward PE ratio for Abbott is ~22x for 2015. It’s ~23.7x for the industry.