Abbott Laboratories (ABT): investment thesis checklist
What a value investor writing down why they own Abbott Laboratories would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 10.8% in FY2025; between 0.5% and 16.0% over 7 filed years, median 10.8%. Does the thesis need it to stay inside that range?
- Return on equity: 12.5% in FY2025; between 1.5% and 28.1% over 10 filed years, median 13.1%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 3.4% in FY2025; between 2.6% and 4.4% over 10 filed years, median 3.4%. Does the thesis need it to stay inside that range?
- EV to EBIT: 27.89x in FY2025; between 24.13x and 75.66x over 8 filed years, median 31.05x. Does the thesis need it to stay inside that range?
- Price to earnings: 33.68x in FY2025; between 14.80x and 211.37x over 10 filed years, median 38.29x. Does the thesis need it to stay inside that range?
- Gross margin: 56.4% in FY2025; between 54.7% and 58.5% over 10 filed years, median 56.4%. Does the thesis need it to stay inside that range?
- Operating margin: 18.2% in FY2025; between 5.7% and 19.6% over 10 filed years, median 15.8%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: 0.59x in FY2025; between 0.59x and 7.09x over 8 filed years, median 1.05x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 5.1% in FY2025; between -11.7% and 15.6% over 8 filed years, median 5.6%. Does the thesis need it to stay inside that range?
- Share count change: 0.0% in FY2025; between -1.4% and 17.9% over 9 filed years, median 0.2%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Abbott Laboratories's own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 0.34x
Today 0.27x. Replayed over 8 filed years, it would have broken in 6; most recently FY2023, at 0.41x (10-K, filed 2024-02-16).
Return on Invested Capital stays at or above 8.6%
Today 10.75%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $2.49
Today $2.52. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 0.34x.
- A filed year in which return on invested capital fell below 8.6%.
- A filed year in which dividend rate fell below $2.49.
4. The published tests it meets today
Of 30 tests value investors published: 4 met, 25 not met, 1 we could not complete. Counts, never a score.
Meets: Low beta, profitable; ROIC at or above WACC; Z-score and coverage (Edward Altman); Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.