For Ask Matt readers: Abbot Laboratories (ABT) – Attractive Rating

For readers of Matt Krantz’ latest column: “Abbot’s stock worth a look“.

Abbott Laboratories (ABT) earned our Attrac­tive Rat­ing. To get this rat­ing, ABT achieved high quality-of-earnings (1) pos­i­tive eco­nomic prof­its (as dis­tinct from account­ing prof­its**) and (2) a cheap val­u­a­tion. As shown in our free report on ABT, the company’s ROIC (at 14%) is in the Second Quin­tile of the 3000+ compa­nies we cover.

HIDDEN GEM: ABT’s current stock price (~$45 per share) implies the company’s profits will permanently decline  by 20%. In other words, the market is not only giving no credit for future profit growth, it is predicting a significant (20%) decline in profits.

See Appen­dix 4 to learn how ABT increased NOPAT by and increased its NOPAT Mar­gin as expenses grew more slowly than rev­enue. See Appen­dix 5 for details on  its Invested Cap­i­tal. Our report provides all details behind our conversion of reported accounting earnings into true economic earnings.

As per Invest­ment Strat­egy 101 and How to make money pick­ing stocks, ABT has Attrac­tive Risk/Reward.,

**See Finance 101 and Eco­nomic Ver­sus Account­ing Prof­its for more detail on why account­ing prof­its are not reli­able indi­ca­tors of cor­po­rate prof­itabil­ity or value creation.

1 Comment

  • Lewis Lerud

    July 18, 2011

    Very educating blog, bookmarked the web-site in interest to see additional!

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