BAX Stock Overview
Baxter International Inc., through its subsidiaries, develops and provides a portfolio of healthcare products worldwide.
Baxter International Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$60.46|
|52 Week High||US$89.70|
|52 Week Low||US$57.49|
|1 Month Change||-5.21%|
|3 Month Change||-17.21%|
|1 Year Change||-18.91%|
|3 Year Change||-30.48%|
|5 Year Change||-0.67%|
|Change since IPO||374.20%|
Recent News & Updates
Baxter's Shares Are Starting To Look Cheap
Baxter boasts a broad portfolio of medically necessary products and therapies, and its brand strength is a key advantage. The company's products can be found in just about any healthcare facility from hospitals to nursing homes and beyond in over 100 countries. Due to Baxter acquiring Hillrom in December 2021, management is prioritizing deleveraging efforts as Baxter’s net debt load swelled higher to fund the deal. We think shares of Baxter are starting to look attractive at ~$60 each, as our fair value estimate derived from our discounted cash flow process stands north of $80 per share. Shares yield ~1.9% at the time of this writing, though we note the firm's dividend isn't as strong as others. By The Valuentum Team Baxter International (BAX) boasts a broad portfolio of medically necessary products and therapies, and its brand strength is a key advantage as the majority of its sales come from products with leading market positions. Some of its products include dialysis therapies, intravenous solutions, infusion systems and devices, parenteral nutrition therapies, advanced surgical equipment, smart beds, and respiratory health devices, among others. The company's products can be found in just about any healthcare facility from hospitals to nursing homes and beyond in over 100 countries. In December 2021, Baxter acquired Hillrom through a deal worth ~$12.5 billion by enterprise value. Within three years of the deal closing, Baxter aims to generate ~$250 million in annualized pre-tax cost synergies due to the highly complementary nature of Hillrom’s portfolio. Going forward, Baxter is prioritizing deleveraging activities and the enlarged firm is expected to be a stellar free cash flow generator. We think shares of Baxter are starting to look attractive at ~$60 each, as our fair value estimate derived from our discounted cash flow process stands north of $80 per share. Shares yield ~1.9% at the time of this writing, though we note the firm's dividend isn't as strong as others on the basis of our Dividend Cushion analysis. Dividend Cushion Ratio Evaluation (Image Source: Valuentum) The Dividend Cushion Ratio Deconstruction, shown in the image above, reveals the numerator and denominator of the Dividend Cushion ratio. At the core, the larger the numerator, or the healthier a company's balance sheet and future free cash flow generation, relative to the denominator, or a company's cash dividend obligations, the more durable the dividend. In the context of the Dividend Cushion ratio, Baxter's numerator is smaller than its denominator suggesting weak dividend coverage in the future. The Dividend Cushion Ratio Deconstruction image puts sources of free cash in the context of financial obligations next to expected cash dividend payments over the next 5 years on a side-by-side comparison. Because the Dividend Cushion ratio and many of its components are forward-looking, our dividend evaluation may change upon subsequent updates as future forecasts are altered to reflect new information. Baxter's Key Investment Considerations Image Source: Valuentum Baxter has a broad portfolio of essential renal and hospital products. Its global footprint helps it play a key role in expanding access to healthcare in emerging and developed countries alike. The majority of the firm's revenue is generated from products in market-leading positions. The company split via a tax-free distribution to shareholders in 2015. Baxter's strong image and brand is augmented by an extensive global footprint and channel strength. The company continues to focus on growing international sales, which should be helped by its strong pipeline of new product launches. In December 2021, Baxter acquired Hillrom through a deal worth ~$12.5 billion by enterprise value. Hillrom had a highly complementary portfolio in the medical technology space and within three years of the deal closing, Baxter aims to generate ~$250 million in annualized pre-tax cost synergies. Deleveraging activities are being prioritized in the medium-term. Baxter’s net debt load swelled in the wake of its deal for Hillrom and its pro forma adjusted EBITDA to net debt ratio stood at ~4.2x immediately after the acquisition closed. Within two years of the deal closing, management aims to bring Baxter’s leverage ratio down to ~2.75x. Baxter's dividend was reduced as a result of it splitting into two independent companies in 2015, but management has stepped up with some large payout hikes since then. Competing capital allocation options have the potential to impact the pace of dividend expansion moving forward. Due to Baxter acquiring Hillrom in December 2021, management is prioritizing deleveraging efforts as Baxter’s net debt load swelled higher to fund the deal. Within two years of the deal closing, Baxter aims to reduce its net debt to adjusted EBITDA ratio down to ~2.75x, down sharply from ~4.2x on a pro forma basis immediately after the deal closed. Baxter's Economic Profit Analysis The best measure of a company's ability to create value for shareholders is expressed by comparing its return on invested capital with its weighted average cost of capital. The gap or difference between ROIC and WACC is called the firm's economic profit spread. Baxter Intl's 3-year historical return on invested capital (without goodwill) is 17.9%, which is above the estimate of its cost of capital of 8.7%. As such, we assign the firm a ValueCreation rating of EXCELLENT. In the chart below, we show the probable path of ROIC in the years ahead based on the estimated volatility of key drivers behind the measure. The solid grey line reflects the most likely outcome, in our opinion, and represents the scenario that results in our fair value estimate. Baxter is a strong economic-value generator. Image Source: Valuentum Baxter's Cash Flow Valuation Analysis Image Source: Valuentum We think Baxter is worth $81 per share with a fair value range of $63.00 - $99.00. The margin of safety around our fair value estimate is driven by the firm's MEDIUM ValueRisk rating, which is derived from an evaluation of the historical volatility of key valuation drivers and a future assessment of them. Our near-term operating forecasts, including revenue and earnings, do not differ much from consensus estimates or management guidance. Our model reflects a compound annual revenue growth rate of 8.4% during the next five years, a pace that is higher than the firm's 3- year historical compound annual growth rate of 4.8%. Our valuation model reflects a 5-year projected average operating margin of 18.9%, which is above Baxter Intl's trailing 3- year average. Beyond year 5, we assume free cash flow will grow at an annual rate of 4% for the next 15 years and 3% in perpetuity. For Baxter Intl, we use a 8.7% weighted average cost of capital to discount future free cash flows. Baxter's Margin of Safety Analysis Image Source: Valuentum Our discounted cash flow process values each firm on the basis of the present value of all future free cash flows. Although we estimate the firm's fair value at about $81 per share, every company has a range of probable fair values that's created by the uncertainty of key valuation drivers (like future revenue or earnings, for example). After all, if the future were known with certainty, we wouldn't see much volatility in the markets as stocks would trade precisely at their known fair values. This is an important way to view the markets as an iterative function of future expectations. As future expectations change, so should the company's value and its stock price. Stock prices are not a function of fixed historical data but rather act in such a way to capture future expectations within the enterprise valuation construct. This is a key part of our book Value Trap: Theory of Universal Valuation.
Are Investors Undervaluing Baxter International Inc. (NYSE:BAX) By 45%?
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Baxter International...
|BAX||US Medical Equipment||US Market|
Return vs Industry: BAX exceeded the US Medical Equipment industry which returned -20.3% over the past year.
Return vs Market: BAX underperformed the US Market which returned -11.7% over the past year.
|BAX Average Weekly Movement||4.6%|
|Medical Equipment Industry Average Movement||9.6%|
|Market Average Movement||7.8%|
|10% most volatile stocks in US Market||16.9%|
|10% least volatile stocks in US Market||3.2%|
Stable Share Price: BAX is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.
Volatility Over Time: BAX's weekly volatility (5%) has been stable over the past year.
About the Company
Baxter International Inc., through its subsidiaries, develops and provides a portfolio of healthcare products worldwide. The company offers peritoneal dialysis and hemodialysis, and additional dialysis therapies and services; intravenous therapies, infusion pumps, administration sets, and drug reconstitution devices; remixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services; parenteral nutrition therapies and related products; biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention; and continuous renal replacement therapies and other organ support therapies focused in the intensive care unit. It also provides connected care solutions, including devices, software, communications, and integration technologies; integrated patient monitoring and diagnostic technologies to help diagnose, treat, and manage a various illness and diseases, including respiratory therapy, cardiology, vision screening, and physical assessment; surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.
Baxter International Fundamentals Summary
|BAX fundamental statistics|
Is BAX overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|BAX income statement (TTM)|
|Cost of Revenue||US$8.34b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||2.01|
|Net Profit Margin||7.12%|
How did BAX perform over the long term?See historical performance and comparison
1.9%Current Dividend Yield
Does BAX pay a reliable dividends?See BAX dividend history and benchmarks
|Baxter International dividend dates|
|Ex Dividend Date||Sep 01 2022|
|Dividend Pay Date||Oct 03 2022|
|Days until Ex dividend||19 days|
|Days until Dividend pay date||51 days|
Does BAX pay a reliable dividends?See BAX dividend history and benchmarks
Is BAX undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 5/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for BAX?
Other financial metrics that can be useful for relative valuation.
|What is BAX's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does BAX's PE Ratio compare to its peers?
|BAX PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
IDXX IDEXX Laboratories
ZBH Zimmer Biomet Holdings
BAX Baxter International
Price-To-Earnings vs Peers: BAX is good value based on its Price-To-Earnings Ratio (30.1x) compared to the peer average (59x).
Price to Earnings Ratio vs Industry
How does BAX's PE Ratio compare vs other companies in the US Medical Equipment Industry?
Price-To-Earnings vs Industry: BAX is good value based on its Price-To-Earnings Ratio (30.1x) compared to the US Medical Equipment industry average (33.7x)
Price to Earnings Ratio vs Fair Ratio
What is BAX's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||30.1x|
|Fair PE Ratio||38.9x|
Price-To-Earnings vs Fair Ratio: BAX is good value based on its Price-To-Earnings Ratio (30.1x) compared to the estimated Fair Price-To-Earnings Ratio (39x).
Share Price vs Fair Value
What is the Fair Price of BAX when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: BAX ($60.46) is trading below our estimate of fair value ($106.63)
Significantly Below Fair Value: BAX is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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How is Baxter International forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?
Future Growth Score3/6
Future Growth Score 3/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: BAX's forecast earnings growth (19.1% per year) is above the savings rate (1.9%).
Earnings vs Market: BAX's earnings (19.1% per year) are forecast to grow faster than the US market (14.4% per year).
High Growth Earnings: BAX's earnings are forecast to grow, but not significantly.
Revenue vs Market: BAX's revenue (4.7% per year) is forecast to grow slower than the US market (7.9% per year).
High Growth Revenue: BAX's revenue (4.7% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: BAX's Return on Equity is forecast to be high in 3 years time (24.9%)
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How has Baxter International performed over the past 5 years?
Past Performance Score1/6
Past Performance Score 1/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: BAX has a large one-off loss of $674.0M impacting its June 30 2022 financial results.
Growing Profit Margin: BAX's current net profit margins (7.1%) are lower than last year (9.2%).
Past Earnings Growth Analysis
Earnings Trend: BAX's earnings have grown by 3% per year over the past 5 years.
Accelerating Growth: BAX's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: BAX had negative earnings growth (-9.7%) over the past year, making it difficult to compare to the Medical Equipment industry average (2.5%).
Return on Equity
High ROE: BAX's Return on Equity (11.5%) is considered low.
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How is Baxter International's financial position?
Financial Health Score2/6
Financial Health Score 2/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: BAX's short term assets ($7.9B) exceed its short term liabilities ($3.9B).
Long Term Liabilities: BAX's short term assets ($7.9B) do not cover its long term liabilities ($19.0B).
Debt to Equity History and Analysis
Debt Level: BAX's net debt to equity ratio (166.6%) is considered high.
Reducing Debt: BAX's debt to equity ratio has increased from 37.7% to 187.4% over the past 5 years.
Debt Coverage: BAX's debt is not well covered by operating cash flow (11.1%).
Interest Coverage: BAX's interest payments on its debt are well covered by EBIT (6.9x coverage).
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What is Baxter International current dividend yield, its reliability and sustainability?
Dividend Score 3/6
Cash Flow Coverage
Current Dividend Yield
Upcoming Dividend Payment
Dividend Yield vs Market
Notable Dividend: BAX's dividend (1.92%) is higher than the bottom 25% of dividend payers in the US market (1.49%).
High Dividend: BAX's dividend (1.92%) is low compared to the top 25% of dividend payers in the US market (4%).
Stability and Growth of Payments
Stable Dividend: BAX's dividend payments have been volatile in the past 10 years.
Growing Dividend: BAX's dividend payments have fallen over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonable payout ratio (56.1%), BAX's dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: With its reasonable cash payout ratio (51.9%), BAX's dividend payments are covered by cash flows.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Joe Almeida (60 yo)
Mr. Jose E. Almeida, also known as Joe, has been the Chairman of the Board and Chief Executive Officer of Baxter International Inc. since January 1, 2016 and serves as its President since January 01, 2016....
CEO Compensation Analysis
Compensation vs Market: Joe's total compensation ($USD15.63M) is about average for companies of similar size in the US market ($USD12.88M).
Compensation vs Earnings: Joe's compensation has been consistent with company performance over the past year.
Experienced Management: BAX's management team is considered experienced (3.8 years average tenure).
Experienced Board: BAX's board of directors are considered experienced (5.5 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Baxter International Inc.'s employee growth, exchange listings and data sources
- Name: Baxter International Inc.
- Ticker: BAX
- Exchange: NYSE
- Founded: 1931
- Industry: Health Care Equipment
- Sector: Healthcare
- Implied Market Cap: US$30.202b
- Shares outstanding: 503.61m
- Website: https://www.baxter.com
Number of Employees
- Baxter International Inc.
- One Baxter Parkway
- United States
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/08/12 00:00|
|End of Day Share Price||2022/08/12 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.