Becton Dickinson (NYSE:BDX) sells healthcare necessities, including needles, syringes and other basic supplies that medical professionals use to collect and analyze their specimens. Sales and profits aren't expanding as briskly as in recent years, but there are still plenty of reasons to consider investing in the stock.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

First Quarter Recap
Revenues advanced a modest 2.5% to $1.9 billion. Excluding foreign currency translations, Becton stated that, on this "foreign currency-neutral" basis, sales rose 2.4%, meaning foreign exchange impacts were minimal during the quarter. U.S. revenue was flat at $828.8 million, or roughly 44% of total sales. The rest stemmed from international revenues, which rose a much stronger but still modest 4.5%.

By division, the medical segment, which sells Becton's flagship needles, syringes and related consumable medical products, grew 2.6% to account for just over half of the total top line. The diagnostic unit sells systems to help medical clinics, labs such as Quest Diagnostics (NYSE:DGX) and Laboratory Corporation (NYSE:LH), and hospitals such as Health Management Associates (NYSE:HMA) and HCA Holdings (NYSE:HCA) collect and transport medical specimens. It reported a 3.2% sales rise to account for nearly a third of total sales. The bioscience unit eked out 0.9% growth to account for the remaining 17% of sales. It provides research and clinical tools to help its clients analyze and develop drugs, such as during the clinical trial process.

Reported operating income fell 13.2% to $358.6 million, while net income fell a slightly more severe 16.8% to $263 million. Share buybacks tempered the earnings per diluted share decline to 11% as the bottom line fell to $1.21. Management attributed the negative sales leverage to "difficult pricing comparisons, higher raw material costs and higher expenses from recent acquisitions." (To know more about income statements, read Understanding The Income Statement.)

Though currency fluctuations didn't have much impact on the first quarter, Becton expects it to reduce earnings from its previous guidance of $5.75 to $5.85 per diluted share. It now projects a range of $5.60 to $5.70, or within the range of the $5.62 per diluted share it reported last year. It still expects sales growth of 2 to 4% from the $7.8 billion reported last year.

The Bottom Line
Becton Dickinson isn't growing very rapidly lately, but still has a stellar long-term track record. Over the past decade, sales are up close to 8% annually while earnings are up more than 14%. During this timeframe, management has steadily boosted profitability, with operating earnings rising from less than 17% to right around 22%. Returns on equity are up above 25% while return on invested capital is consistently in the mid to high teens.

At a forward P/E of 12.3, the valuation is reasonable. Becton's sales are relatively stable given it sells basic necessities in the healthcare industry, which itself is relatively recession resistant. The majority of sales also stem from overseas, which should see above-average growth going forward. Profitability is high, the dividend yield is decent at 2.3%, and there is upside potential should profit growth start trending back up closer to historical levels. (For additional reading, check out 5 Must-Have Metrics For Value Investors.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  2. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  3. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  4. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  5. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  6. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  7. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  8. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  9. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  10. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!