On Wednesday, October 17, 2012, Abbott Laboratories (NYSE:ABT) is expected to release its third quarter earnings.

Investors care about earnings because they drive stock prices. Strong earnings generally result in the stock price moving up and vice versa. SEE: How To Decode A Company's Earnings Reports

What to Expect: Analysts are expecting Abbott to report earnings of $1.28 per share, up 8.5% from a year ago, when the company reported earnings of $1.18 per share.

Though it hasn't changed in the last month, the consensus estimate is up from $1.27 three months ago. For the fiscal year, analysts are projecting earnings of $5.06 per share.

Revenue is expected to exceed last year's figure of $9.82 billion by 1% and come in at $9.91 billion for the quarter. The anticipated revenue for the fiscal year is $39.75 billion.

Company Performance: In the past four quarters, revenue has shown consistent growth. It increased 2% to $9.81 billion in the second quarter. Prior to that, the figure rose 4.6% in the first quarter, 4.1% in the fourth quarter of the last fiscal year and 13.2% in the third quarter of the last fiscal year.

ABT's P/E ratio of 22.8 is above the industry average of 14.53. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?

The stock price has increased from $65.48 on July 16, 2012 to $69.42 over the past quarter. Currently, Abbott's stock is on a downward trend. The share price has fallen $2.19 since October 5, 2012.

The Competition: Abbott Laboratories is a pharmaceuticals health care company, whose main line of business is in the discovery, development, manufacture, and sale of a broad range of health care products. Its customers include wholesalers, hospitals and commercial laboratories. The company's closest competitor in the biotechnology and drugs industry, Johnson & Johnson (JNJ), will report earnings on October 16, 2012. Analysts are expecting earnings of $1.21 per share for Johnson & Johnson, down 2.4% from last year's earnings of $1.24 per share. Analysts are less optimistic about Abbott than about Johnson & Johnson. Fourteen out of 22 analysts rate the latter a buy compared to six of 18 for the former.

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  6. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  7. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  8. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  9. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  10. Professionals

    Tips for Helping Clients Though Market Corrections

    When the stock market sees a steep drop, clients are bound to get anxious. Here are some tips for talking them off the ledge.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  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. 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 >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
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!