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The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Becton Dickinson (NYSE:BDX). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Becton Dickinson with the means to add long-term value to shareholders.
View our latest analysis for Becton Dickinson
Becton Dickinson's Improving Profits
Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So EPS growth can certainly encourage an investor to take note of a stock. It's good to see that Becton Dickinson's EPS has grown from US$5.13 to US$5.88 over twelve months. This amounts to a 14% gain; a figure that shareholders will be pleased to see.
Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. Becton Dickinson maintained stable EBIT margins over the last year, all while growing revenue 4.2% to US$20b. That's a real positive.
The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Becton Dickinson's forecast profits?
Are Becton Dickinson Insiders Aligned With All Shareholders?
Since Becton Dickinson has a market capitalisation of US$72b, we wouldn't expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. With a whopping US$92m worth of shares as a group, insiders have plenty riding on the company's success. That's certainly enough to let shareholders know that management will be very focussed on long term growth.