Becton Dickinson and Company Quarterly Valuation – November 2014 $BDX

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Becton Dickinson certainly should attract the Enterprising Investor’s initial attention as the company passes all of the investor type’s requirements. Defensive Investors, on the other hand, should look at other opportunities at this time, with concerns regarding the high PEmg and PB ratios. That said, Enterprising Investors are less conservative and should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

Such a determination requires looking at the company’s earnings growth and examining the market’s implied estimate of further growth. The company has grown its EPSmg (normalized earnings) from $4.71 in 2010 to an estimated $6.05 for 2014. This level of demonstrated growth does not support the market’s implied estimate for earnings growth of 6.22% over the next 7-10 years. A more conservative estimate for growth would be around 4.27% based on the historical performance of the company and discounting for possible changes in the future. As a result, the ModernGraham valuation model returns an estimate of intrinsic value falling below the current price, indicating the company is overvalued at the present time.

Be sure to check out previous ModernGraham valuations of Becton, Dickinson and Co. for better perspective!

Read the full valuation on Seeking Alpha!

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