Becton, Dickinson is Doing Well in the Medical Supply Business

Stock (Symbol)

Becton, Dickinson (BDX)

Stock Price


Data is as of
October 10, 2016
Expected to Report
Nov 3
Company Description
bectondickinson_labBDX is a global medical technology company engaged in the development, manufacture and sale of a range of medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions, life science researchers, clinical laboratories. The Company operates through two segments: BD Medical and BD Life Sciences. The Company’s Life Sciences segment consists of the BD Diagnostics and BD Biosciences segments. The Company’s BD Medical segment focuses on providing solutions to reduce the spread of infection, enhance diabetes treatment and advance drug delivery. The Company’s BD Diagnostics provides products for the safe collection and transport of diagnostics specimens, as well as instruments and reagent systems. Its BD Biosciences provide diagnostic and research tools to life science researchers, clinical researchers, laboratory professionals and clinicians. Source: Thomson Financial
Sharek’s Take
David SharekBecton, Dickinson (BDX) has manufactured syringes, catheters, lab equipment, diagnostic tests, and other disposable items for hospitals since 1897. Last year BDX acquired CareFusion, a maker of precision drug dispensing equipment, and said this merger will save hundreds of millions through synergies and add 22% to 2016 EPS — which is huge for what is basically a 10% grower. What’s more is Becton, Dickinson now offers a more complete menu of medical products to hospitals. Becton can also use its deep International network to sell CareFusion products, which had just a limited presence abroad. China grew 10% last qtr and the company did well with diabetic pen needles. BDX had strong growth earlier this year due to the CareFusion acquisition, but that was more than a year ago and now growth is moderating. Still, the company has been beating the street and the stock is timely. Becton, Dickinson is a safe stable stock that’s grown profits every year for the last decade. It’s Estimated Long Term Growth Rate of 13% a year in addition to a 2% dividend which has increased every year since 1972. This is a nice safe stock for conservative investors as its a Healthcare stock that isn’t under attack from a likely Clinton Presidential election win.
One Year Chart
bdx_2016_q3BDX’s delivered 15% profit growth on 4% sales growth. Comparisons were tougher last qtr as the prior 4 qtrs had the CareFusion merger benefiting sales and profits. Profit estimates for last qtr were 8% and company beat the street. Now profit Estimates for the next 4 qtrs are 8%, 10%, 5% and 7%. BDX has beaten the street for at least 5 qtrs, and I’m guessing that will continue. Annual Profit Estimates stayed around the same as last qtr. P/E is 19 when looking at 2017 earnings.
Fair Value
bdx_2016_q3_phMy Fair Value on this stock is 20x earnings, which gives investors modest upside the next two years. And the dividend.
Bottom Line
bdx_2016_q3_10yrBecton, Dickinson has gotten a jolt of new energy with CareFusion, which has been a huge success as it added profits, subtract costs, and has given International growth opportunity. But now profit growth has simmered down so this is more of a buy-and-hold investment at this point. BDX ranks 17th of 35 stocks in the Conservative Portfolio Power Rankings. I like that this gives investors a Healthcare stock while not being drug related, as a likely Hillary election has put lots of stocks in the sector under pressure. 
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