If EPS Growth Is Important To You, Becton Dickinson (NYSE:BDX) Presents An Opportunity

Published
August 09, 2022
NYSE:BDX
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It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like Becton Dickinson (NYSE:BDX), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

Check out our latest analysis for Becton Dickinson

Becton Dickinson's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. Shareholders will be happy to know that Becton Dickinson's EPS has grown 32% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.

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 5.3% to US$20b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

earnings-and-revenue-history
NYSE:BDX Earnings and Revenue History August 9th 2022

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Becton Dickinson's future profits.

Are Becton Dickinson Insiders Aligned With All Shareholders?

Since Becton Dickinson has a market capitalisation of US$73b, we wouldn't expect insiders to hold a large percentage of shares. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth US$161m. We note that this amounts to 0.2% of the company, which may be small owing to the sheer size of Becton Dickinson but it's still worth mentioning. This should still be a great incentive for management to maximise shareholder value.

Does Becton Dickinson Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Becton Dickinson's strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Becton Dickinson's continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. We don't want to rain on the parade too much, but we did also find 2 warning signs for Becton Dickinson (1 doesn't sit too well with us!) that you need to be mindful of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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