How Does Abbott Compare With Its Peers in the Industry?



Abbott and its peers

Abbott Laboratories (ABT) is a US pharmaceutical and healthcare company. It has many close competitors including Danaher (DHR), Herbalife (HLF), and Idexx Laboratories (IDXX).

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.

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EV/EBITDA multiple

Abbott’s forward EV/EBITDA multiple is ~13.9x. This is ~0.5x lower than the industry average of ~14.4x. Here’s how the enterprise multiples of other pharmaceutical and healthcare companies compare:

  • Danaher (DHR) – ~12.1x
  • Herbalife (HLF) – ~7.7x
  • Idexx Laboratories (IDXX) – ~18x

PE multiple

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.

ETFs like the Health Care Select Sector SPDR ETF (XLV) and the iShares US Healthcare ETF (IYH) are focused on pharmaceutical and healthcare companies.


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