BDX’s earnings estimate
Wall Street has projected a rise in Becton, Dickinson and Company’s (BDX) net profit margins. They are expected to come in at ~$437 million, representing a YoY (year-over-year) rise of around 14.2%, in fiscal 2Q16. BDX’s gross profit margins are expected to register a rise of ~52% YoY.
BDX entered into a number of tuck-in acquisitions in recent quarters. It also completed the large-scale acquisition of CareFusion in March 2015. BDX’s strategic inorganic growth strategy has led to the company’s entry into new markets.
The strategy has also added complementary products to BDX’s existing business, which has been accretive to its growth and continues to build strong growth momentum. BDX also undertook various strategic restructuring and collaboration activities in fiscal 1Q16, which positioned it as a more efficient and profitable business.
For more information on these acquisitions, divestments, and collaborations, you can read Behind Becton Dickinson’s Strategic Restructuring and Business Consolidation.
BDX expects to register an operating margin expansion of 170–190 bps (basis points) in 2016, compared to its 100 bps margin expansion in 2015. It expects this expansion to come amid operating efficiencies and synergies realized through lower oil prices, general and administrative functional transformation, other cost optimization initiatives, and strategic acquisitions and collaborations.
Consensus EPS estimates versus actual performance trends
Wall Street has provided a consensus EPS (earnings per share) estimate of $2.01 for BDX in fiscal 2Q16. The company has provided adjusted EPS guidance of $8.37–$8.44 for fiscal 2016. The currency neutral EPS guidance provided by BDX stands at $9.01–$9.08.
The above graph shows that BDX has consistently beaten consensus EPS estimates for the past several quarters. Analysts expect BDX to register adjusted EPS growth of 27.1% YoY in fiscal 2Q16.
For the quarter ending March 31, 2016, major competitors Boston Scientific (BSX), Abbott Laboratories (ABT), and Baxter International (BAX) registered YoY net profit margins of 13.3%, 6.4%, and 6.8%, respectively.
Investors can consider investing in the iShares S&P 500 Growth ETF (IVW). Becton, Dickinson and Company accounts for around 0.37% of IVW’s total holdings.