We are maintaining our $630 fair value estimate for wide-moat Thermo Fisher following its second-quarter results. Organic revenue declined 1% in the quarter but was effectively flat once adjusted for the remainder of the covid-19 revenue in the prior year. Performance on the top and bottom lines is in line with our forecast, and the company is now set to recover in the second half of the year.
Thermo Fisher is among the industry's best when it comes to cost control. As near-term spending is constrained, the company's margins show exceptional resilence.
The company was able to fuel its acquisition spree via access to extremely inexpensive debt. Generating excess returns on acquisitions in a current less favorable interest-rate environment might be more challenging.
|
Metric
|
TMO
|
A
|
WAT
|
|---|---|---|---|
Price/Earnings (Normalized) | 27.50 | 25.86 | 26.41 |
Price/Book Value | 4.79 | 6.44 | 14.65 |
Price/Sales | 5.41 | 6.14 | 6.33 |
Price/Cash Flow | 26.66 | 21.64 | 22.31 |
|
Metric
|
TMO
|
A
|
WAT
|
|---|---|---|---|
Quick Ratio | 1.19 | 1.49 | 1.39 |
Current Ratio | 1.70 | 2.15 | 2.22 |
Interest Coverage | 4.83 | 15.34 | 8.28 |
|
Metric
|
TMO
|
A
|
WAT
|
|---|---|---|---|
Return on Assets (Normalized) | 8.69% | 14.45% | 17.19% |
Return on Equity (Normalized) | 18.71% | 26.40% | 88.59% |
Return on Invested Capital (Normalized) | 10.97% | 18.41% | 25.75% |
|
1-Day Chart
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Morningstar Rating for Stocks
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