Understanding Thermo Fisher Scientific’s Valuation among Peers



Peer comparison

On July 08, 2016, Thermo Fisher Scientific (TMO) was trading at a forward PE (price-to-earnings) multiple of ~18.3x, as compared to the industry average of ~21x. The company is trading at a lower multiple than peers Becton Dickinson (BDX), Abbott Laboratories (ABT), and Agilent Technologies (A).

The forward price-to-earnings ratio measures the company’s growth by comparing the stock price of a company with its 12-month expected earnings per share. Notably, the iShares Core S&P 500 ETF (IVV) has about 0.69% of its total holdings in Medtronic.

Notably, the iShares Core S&P 500 ETF (IVV) has about 0.69% of its total holdings in Medtronic.

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Stock price performance and fundamentals

On July 07, 2016, Thermo Fisher Scientific’s share price was $149.1, representing a rise of ~2.6% since the company’s 1Q16 earnings release on April 28, 2016. The stock traded at a 52-week high of $154.8 on June 9, 2016, and at a 52-week low of $117.1 on Sep 28, 2015.

Thermo Fisher Scientific’s stock price has risen gradually over the last few months, driven by its successful Life Technologies integration and other strategic initiatives. Thermo Fisher Scientific has a leading product portfolio and a strong pipeline of products.

Acquisitions and dividends

The company’s recent acquisitions include Affymetrix and FEI Company, and these are expected to improve TMO’s growth and profitability. The company’s stable cash flows and strong balance sheet are also expected to continue to support its share repurchase and dividend payout plans.

Thermo Fisher Scientific has a dividend yield of 0.4 and announced the quarterly dividend of $0.15 per share to be paid on July 15, 2016. The company made share buybacks of $1 billion in the 1Q16.

Now let’s take a look at TMO’s innovation initiatives.


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