Abbott Laboratories Third Quarter Earnings Preview

By Investopedia Staff | October 12, 2012 AAA

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 Analysis
  1. Is Natural Gas About to Tank?
    Chart Advisor

    Is Natural Gas About to Tank?

  2. Pharma Industry Outlook: M&A, Licensing Abound - Industry Outlook
    Stock Analysis

    Pharma Industry Outlook: M&A, Licensing Abound - Industry Outlook

  3. Is It A Breakout? See The Point-And-Figure Chart
    Chart Advisor

    Is It A Breakout? See The Point-And-Figure Chart

  4. These Stocks Offer Range-Trading Opportunities
    Chart Advisor

    These Stocks Offer Range-Trading Opportunities

  5. How To Trade Rising Livestock Prices
    Chart Advisor

    How To Trade Rising Livestock Prices

Trading Center