Declining Stock and Decent Financials: Is The Market Wrong About Abbott Laboratories (NYSE:ABT)?

Abbott Laboratories (NYSE:ABT) has seen its stock price decline by 3.2% over the past month, despite the company reporting solid financial results. The stock fell short of the S&P 500, which registered a gain of 0.56% for the day, and the Dow added 0.42%, while the tech-heavy Nasdaq gained 0.83%. Coming into today, shares of the maker of infant formula, medical devices, and drugs had gained 4.92% in the past month. However, the Medical sector lost 2.27% during the same period, while the S&P 500 gained 3.11%.

The company's earnings growth has been relatively stable compared to its peers and the broader market. In the past year, Abbott's earnings per share (EPS) grew by 11.9%, which is slightly lower than the average growth rate of its peers in the Medical sector, which was 12.61%. However, it is important to note that Abbott's EPS growth is still higher than the broader market's average EPS growth of 3.11% during the same period.

Abbott Laboratories is forecasted to report an EPS of $1.34 in its upcoming earnings disclosure, showcasing a 12.61% upward movement from the corresponding quarter of the prior year. Meanwhile, our latest consensus estimate is calling for revenue of $11.03 billion, up 7.71% from the prior-year quarter. ABT's full-year Zacks Consensus Estimates are calling for earnings of $4.67 per share and revenue of $42.01 billion, representing year-over-year changes of +5.18% and +4.73%, respectively. These results would represent year-over-year changes of +5.18% and +4.73%, respectively.



Investors should keep an eye on any recent revisions to analyst forecasts for Abbott Laboratories. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability. Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Abbott Laboratories is currently a Zacks Rank #3 (Hold).



In terms of valuation, Abbott Laboratories is currently trading at a Forward P/E ratio of 25.47. This signifies a discount in comparison to the average Forward P/E of 26.43 for its industry. Investors should also note that ABT has a PEG ratio of 2.8 right now. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The average PEG ratio for the Medical - Products industry stood at 2.37 at the close of the market yesterday. The Medical - Products industry is part of the Medical sector. At present, this industry carries a Zacks Industry Rank of 123, placing it within the top 49% of over 250 industries.

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. This then helps them determine if the stock is placed for a bright or bleak future. What is ABT worth today? The intrinsic value infographic in our free research report helps visualize whether ABT is currently mispriced by the market.

In conclusion, while Abbott Laboratories' stock price has declined recently, the company's financial performance and earnings growth prospects remain strong. The market may be overreacting to short-term factors, and investors should consider the company's long-term fundamentals and valuation when making investment decisions.