Abbott Laboratories (ABT)

Conclusion

Abbott Laboratories is a US healthcare company that develops and sells diagnostic systems, nutritional products, medical devices and established pharmaceuticals. At 110.51 USD on 9 November 2026, its market capitalisation is 191.2 billion USD and its enterprise value is 218.1 billion USD.

The verdict is fair. Today's P/E of 40.7 sits 5.5% above its ten-year median of 38.5, and EV/EBITDA of 22.5 sits 7.6% above its median of 20.9. On free cash flow, P/FCF of 21.1 is at a discount of 28.8% to its median of 29.6. The DCF gives 103.15 USD per share at a discount rate of 8.9%. The fair value band runs from 92.95 to 139.43 USD with a midpoint of 116.19 USD, a margin of safety of 5.1% at the current price. The reverse DCF implies growth of 7.2% a year, while revenue grew 5.1% a year over five years and free cash flow per share 5.7%.

What holds the case up is free cash flow conversion of 192.8% on a trailing twelve-month basis and 88.9% over five years, interest coverage of 8.06, and a share count that fell 0.4% a year over five years. What could break it is a return on invested capital of 6.0% against a WACC of 8.2%, a net debt to EBITDA of 2.77, and revenue growth of only 0.5% a year over three years.

Financial health

Financial strength is green, held up by interest coverage of 8.06 and a current ratio of 1.45, both assessed good, while net debt to EBITDA of 2.77 is neutral and the only watch point. The quick ratio is not available. Debt to equity stands at 0.48 as of 30 September 2026. The Altman Z-score is not available because the inputs needed for it are missing, so no zone can be given. The Altman model was designed for manufacturers. Insolvency risk: low, about 0.09% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 192.8% on a trailing basis, a Beneish M-score of -2.53 that reads as unlikely manipulation, and a falling share count. Five-year free cash flow conversion of 88.9% is neutral. The accrual ratio is -3.6%, and stock-based compensation is 1.5% of revenue, leaving free cash flow after stock compensation of 8.33 billion USD. The Piotroski score is 6 out of 9, which is neutral. Over the last eight quarters the company beat estimates three times and missed once, with an average surprise of 0.5%. Estimates for next year were cut by 2.1% over 90 days, with one upward and two downward revisions in the last 30 days.

Profitability

Profitability is yellow, because return on invested capital is below the cost of capital. Gross margin of 57.1% is above its ten-year median of 51.4%. Operating margin of 15.2% is close to its median of 15.8%, and net margin of 9.8% is below its median of 13.6%. ROIC is 6.0% against a WACC of 8.2%, with ROIC minus WACC given as -2.2%, which the company's figures label as value-destroying. The five-year median ROIC is 12.0%. Return on equity is 7.2%. The DuPont split for 2025 shows a net margin of 14.7%, an asset turnover of 0.51 and an equity multiplier of 1.66, so leverage is not inflating the return.

Growth

Growth is green on the scorecard, though the three-year trend is weak. Revenue compound growth is 0.5% over three years, 5.1% over five years and 8.1% over ten. Earnings per share compound at -1.7% over three years, 8.2% over five and 2.4% over ten. Free cash flow per share compounds at -1.5% over three years, 5.7% over five and 13.1% over ten. Revenue grew in nine of the ten comparable years. Analysts expect earnings per share growth of 7.6% next year.

Valuation

Valuation is yellow, with the price close to the fair value midpoint. Today's P/E and EV/EBITDA are above their ten-year medians, by 5.5% and 7.6%, while P/FCF, P/S and P/B are below theirs, by 28.8%, 14.5% and 41.3%. The DCF gives 103.15 USD per share at a discount rate of 8.9%, with 57.6% of its value in the terminal period. The fair value from historical multiples is 129.23 USD. The fair value band is 92.95 to 139.43 USD around a midpoint of 116.19 USD. The reverse DCF implies growth of 7.2%, with gap figures of 2.1% against five-year revenue growth and 1.5% against five-year growth in free cash flow per share. The fair value is an order-of-magnitude estimate built on fixed assumptions, not a price target. The dividend yield is 2.3%, and the payout on free cash flow is 47.7%.

Risks

The weakest numbers would hurt in specific ways. A return on invested capital of 6.0% below a WACC of 8.2% means new investment is not covering its cost, and a fall in earnings would push net debt to EBITDA of 2.77 higher. Revenue growth of 0.5% over three years and a three-year decline in earnings per share of 1.7% show the recent trend is weaker than the ten-year record. Estimate cuts for next year would bring the valuation down if they continue. The quick ratio and the Altman Z-score are not available, so two checks on liquidity and distress cannot be made. This analysis has limits: it has no debt maturity schedule and no revenue by segment, so refinancing needs and the contribution of each business cannot be judged.