Becton Dickinson and Company (BDX)

Conclusion

Becton Dickinson develops, manufactures and sells medical supplies, devices, laboratory equipment and diagnostic products for healthcare institutions, laboratories and the pharmaceutical industry worldwide. At 215.25 USD on 2026-11-09, the market capitalisation is 58.6 billion USD and the enterprise value is 72.3 billion USD.

The verdict is fair. The stock trades at 51.2x earnings, against a ten-year median of 36.0x, while EV/EBITDA of 15.7x is below its ten-year median of 16.2x. The discounted cash flow gives 194.43 USD per share, and the fair value band runs from 167.24 to 250.86 USD with a midpoint of 209.05 USD, a margin of safety of -2.9% at the current price. The reverse DCF implies growth of 5.36% a year, while revenue grew 0.34% a year over five years and earnings per share fell 10.58% a year over the same period.

What holds the case up is free cash flow conversion of 2.56x over the last twelve months, eight earnings beats in eight quarters, and a share count that shrank 0.85% a year over five years. What would break it is return on invested capital of 2.89% against a weighted cost of capital of 7.88%, net debt to EBITDA of 2.96x, and interest coverage of 4.2x.

Financial health

Financial strength is yellow: the current ratio of 8.8x and the quick ratio of 3.7x are strong, but net debt to EBITDA of 2.96x and interest coverage of 4.2x are rated neutral. Debt to equity is 0.28. The Altman Z-score is not available because some of its inputs are missing, and the Altman model was designed for manufacturers, which only partly fits this company. The insolvency risk is low, about 0.08% by the estimate of the Ohlson model over one to two years. Debt has fallen 5.2% a year over five years, which means the balance sheet is shrinking rather than growing.

Earnings quality

Earnings quality is green. Free cash flow conversion is 2.56x over the last twelve months and 1.60x over five years, both above the level of net income. The accrual ratio is -4.6%, which indicates that reported earnings are backed by cash. The Piotroski score is 6 out of 8 evaluable points. The Beneish M-score is not available in the data. Stock-based compensation is not available, so the free cash flow after it, 2.93 billion USD, cannot be checked against the stock compensation cost. The share count fell 0.85% a year over five years, which points to buybacks. The company beat earnings estimates in all eight of the last quarters, by 4.9% on average. Estimates for the current year were revised down 1.2% over the last 90 days, with three upward and no downward revisions in the last 30 days.

Profitability

Profitability is yellow. The gross margin of 47.4% is above its ten-year median of 45.3%, and the operating margin of 11.6% is in line with its median of 11.7%. The net margin of 5.9% is below its median of 7.7%. The main concern is return on invested capital of 2.89% against a weighted cost of capital of 7.88%, a return on invested capital minus cost of capital value of -5.0%, which the model labels as destroying value. Its five-year median is 4.17%, still below the cost of capital. Return on equity is 2.3%, and the DuPont split shows it is driven by a net margin of 5.9% and an asset turnover of 0.38x, with an equity multiplier of 1.00x, so leverage plays no part in it.

Growth

Growth is red. Revenue grew 0.15% a year over three years, 0.34% over five years and 4.54% over ten years, and it rose in six of the last ten comparable years. Earnings per share fell 7.34% a year over three years and 10.58% a year over five years, while free cash flow per share rose 12.63% a year over three years but fell 2.18% a year over five years. Analysts expect earnings per share to grow 6.59% next year, but the estimate was revised down 1.3% over the last 90 days.

Valuation

Valuation is yellow. The price-to-earnings ratio of 51.2x is 42.3% above its ten-year median of 36.0x. The EV/EBITDA of 15.7x is 3.1% below its median of 16.2x, and the price-to-free-cash-flow of 20.0x is 4.8% below its median of 21.0x. The price-to-book of 1.15x is 45.4% below its median of 2.12x. The free cash flow yield is 5.0%. The discounted cash flow gives 194.43 USD per share at a discount rate of 8.87%, with the terminal value making up 55.9% of it. The fair value from historical multiples is 223.68 USD. The reverse DCF implies growth of 5.36% a year, against revenue growth of 0.34% a year over five years. The fair value band is an order-of-magnitude estimate built on fixed assumptions, not a price target. The dividend yield is 2.0% and the payout is 39.6% of free cash flow.

Risks

Return on invested capital below the cost of capital is the central risk, because the business has not earned its cost of capital even at its five-year median. Falling earnings per share over three and five years would undermine any multiple above the historical median, and the current price-to-earnings premium of 42.3% already depends on a recovery. Net debt to EBITDA of 2.96x and interest coverage of 4.2x leave less room if earnings fall. The Altman Z-score, the Beneish M-score and stock-based compensation are not available, so these checks are incomplete. This analysis has no debt maturity schedule and no revenue breakdown by segment, so it cannot show when debt falls due or which business drives growth.