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Becton, Dickinson and Company’s 4Q16 Earnings Estimates

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Earnings estimates

Wall Street projected a rise in Becton, Dickinson and Company’s (BDX) adjusted net profit margins. The margins are expected to come in at ~$453 million—a YoY (year-over-year) rise of around 54% in fiscal 2Q16. Its gross profit margins are expected to register a rise of ~17.4% YoY.

Becton, Dickinson and Company expects to register underlying margin expansion of around 200–210 basis points in fiscal 2016—compared to its margin expansion by 100 basis points in 2015. The margin expansion is coming from the company’s business restructuring synergies which are driving lower SG&A (selling, general and administrative) expenses and operating margins.

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Becton, Dickinson and Company is generating strong gross margins consistently. Also, it has a strong product pipeline. In 4Q16, Becton, Dickinson and Company entered into a deal to establish a new company comprised of its respiratory solutions business. It’s expected to have a positive impact on the company’s margins. For more on Becton, Dickinson and Company’s strategic restructuring, read Behind Becton Dickinson’s Strategic Restructuring and Business Consolidation.

Consensus EPS estimates versus actual performance trends

Wall Street provided a consensus EPS (earnings per share) estimate of $2.09 for Becton, Dickinson and Company in fiscal 4Q16. The company provided adjusted EPS guidance of $8.50–$8.57 for fiscal 2016. The currency neutral EPS guidance provided by the company stands at $9.08–$9.15.

The above graph shows that Becton, Dickinson and Company consistently beat consensus EPS estimates for the past several quarters. Analysts expect it to register adjusted EPS growth of ~53% YoY in fiscal 4Q16.

For the quarter ending September 30, 2016, major competitors such as Abbott Laboratories (ABT), Edwards Lifesciences (EW), and Baxter International (BAX) registered YoY net profit margins of 7.1%, 11.4%, and 6.8%, respectively.

Investors can consider investing in the iShares Core S&P 500 ETF (IVV). Becton, Dickinson and Company accounts for around 0.20% of IVV’s total holdings.

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