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TMO

Thermo Fisher Scientific NYSE:TMO Stock Report

Last Price

US$595.01

Market Cap

US$233.1b

7D

0.4%

1Y

7.8%

Updated

18 Aug, 2022

Data

Company Financials +
TMO fundamental analysis
Snowflake Score
Valuation3/6
Future Growth2/6
Past Performance2/6
Financial Health4/6
Dividends0/6

TMO Stock Overview

Thermo Fisher Scientific Inc. offers life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and service worldwide.

Thermo Fisher Scientific Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Thermo Fisher Scientific
Historical stock prices
Current Share PriceUS$595.01
52 Week HighUS$672.34
52 Week LowUS$497.83
Beta0.83
1 Month Change10.83%
3 Month Change7.18%
1 Year Change7.82%
3 Year Change113.90%
5 Year Change238.15%
Change since IPO6,457.25%

Recent News & Updates

Aug 18
Calculating The Intrinsic Value Of Thermo Fisher Scientific Inc. (NYSE:TMO)

Calculating The Intrinsic Value Of Thermo Fisher Scientific Inc. (NYSE:TMO)

Today we will run through one way of estimating the intrinsic value of Thermo Fisher Scientific Inc. ( NYSE:TMO ) by...

Aug 18

Thermo Fisher: Strong Foundation For Growth

Thermo Fisher has a very attractive product mix and market distribution. Strong performance across pharma, biotech, industrial, and diagnostics segments will continue well into the future. Decreasing revenue from COVID-related products will be more than compensated by other segments of the company in the future. Investment Thesis Thermo Fisher Scientific (TMO) is the world leader in manufacturing scientific devices, instruments, diagnostic products, and related services. The company offers a great combination of stability and growth, and has a highly complementary product mix and favorable revenue profiles in multiple markets that will ensure future growth. Thermo Fisher has been an outstanding investment option for a long time, and I believe this will continue to be the case for a while. The following are the main reasons: All segments of Thermo Fisher are growing at a steady pace, and overall growth will remain strong despite decreasing revenue from COVID-related products. Thermo Fisher's ability to generate cash is impressive, and looks solid heading into the future. High profit margins illustrate a strong economic moat, operational efficiency, and quality of growth. Strong Performance Across The Segments Since my previous article, Thermo Fisher reported 2Q 2022 results, and once again posted great earnings. Overall revenue grew 18% YoY, with strong performance across all of their segments. Pharma and biotech delivered mid-teen growth, academic and government grew in the mid single-digits, and industrial and applied grew in the low double digits. These are outstanding given the challenges from COVID lockdowns, supply chain issues, and cost control. Several new products were launched earlier this year, and they are already boosting Thermo Fisher's growth. An automated sample prep platform (AccelerOme), Thermo Scientific Direct Mass Technology mode for its mass spectrometers, and cloud-based software platform (Thermo Scientific RDO) are assisting customers in reaching greater efficiency in their research and operating environment. The most exciting part of the results was the large increase in the services segment. Three month service revenue nearly doubled from $2.0 B to $4.0 B. As the services segment is a higher margin business, this will improve Thermo Fisher's profit margin even further in the future. Disaggregated Revenue (SEC Filings) Strong Operating Cash Flow Thermo Fisher has always been great at generating operating cash flow, but they have been taking that to the next level in the past couple of years. Operating cash flow was $2.0 B in 2012, and the figure increased to $8.8 B in the past twelve months. With steady organic growth mentioned above and inorganic growth (e.g., recent PPD acquisition), Thermo Fisher will continue to grow, and operating cash flow will increase even further. I particularly expect strong synergies from the PPD acquisition. PPD is the global industry leader in providing services to pharmaceuticals and healthcare companies. They accelerate the development process of medicines and medical devices by providing customers with custom-tailored strategies for clinical development and analytical services. For example, Thermo Fisher supported Moderna's development of the Spikevax COVID vaccine, and the two companies decided in February to extend this collaboration to Moderna's entire pipeline. Combining this formidable service expertise with impressive lines of life science products, I believe Thermo Fisher can now offer the whole package to their customers and partners. Strong Profit Margins Thermo Fisher has a very robust economic moat gained through technological superiority, switching cost, and brand recognition. Also, their management is doing a great job at running the manufacturing site and managing the supply chain efficiently. A strong economic moat and high quality management decisions are demonstrated by high profitability metrics. The high profit margins (EBIT, EBITDA, and Net income margins) represent a strong economic moat. Thermo Fisher is able to charge a premium on their products because they offer better products with advanced technology and strong brand recognition. Meanwhile, the high returns on equity and capital demonstrate manufacturing efficiency and effective supply chain management. I expect them to maintain these quality metrics in the future as well. Profitability Metric (Seeking Alpha) Intrinsic Value Estimation I used the DCF model to estimate the intrinsic value. For the estimation, I utilized EBITDA ($12.7 B) as a cash flow proxy and the current WACC of 8.0% as the discount rate. For the base case, I assumed EBITDA growth of 17% (5 year average revenue growth) for the next 5 years and zero growth afterward (zero terminal growth). For the bullish and very bullish case, I assumed EBITDA growth of 19% and 21%, respectively for the next 5 years and zero growth afterward. The estimation revealed that the current stock price represents 20-25% upside. Their organic growth coming from strong R&D efforts and inorganic growth coming from acquisitions will keep Thermo Fisher growing, and I expect them to achieve this upside. Price Target Upside Base Case $672.88 12% Bullish Case $724.63 20% Very Bullish Case $779.78 30% The assumptions and data used for the price target estimation are summarized below: WACC: 8.0% EBITDA Growth Rate: 17% (Base Case), 19% (Bullish Case), 21% (Very Bullish Case) Current EBITDA: $12,7 B Current Stock Price: $596.83 (08/15/2022) Tax rate: 20% Cappuccino Stock Rating Weighting TMO Economic Moat Strength 30% 5 Financial Strength 30% 4 Growth Rate vs. Sector 15% 4 Margin of Safety 15% 4 Sector Outlook 10% 4 Overall 4.3 Economic Moat

Shareholder Returns

TMOUS Life SciencesUS Market
7D0.4%-0.06%1.1%
1Y7.8%-20.5%-9.0%

Return vs Industry: TMO exceeded the US Life Sciences industry which returned -20.5% over the past year.

Return vs Market: TMO exceeded the US Market which returned -9% over the past year.

Price Volatility

Is TMO's price volatile compared to industry and market?
TMO volatility
TMO Average Weekly Movement4.6%
Life Sciences Industry Average Movement11.0%
Market Average Movement7.6%
10% most volatile stocks in US Market17.0%
10% least volatile stocks in US Market3.1%

Stable Share Price: TMO is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: TMO's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1956130,000Marc Casperhttps://www.thermofisher.com

Thermo Fisher Scientific Inc. offers life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and service worldwide. The company’s Life Sciences Solutions segment offers reagents, instruments, and consumables for biological and medical research, discovery, and production of drugs and vaccines, as well as diagnosis of infections and diseases to pharmaceutical, biotechnology, agricultural, clinical, healthcare, academic, and government markets. Its Analytical Instruments segment provides instruments, consumables, software, and services for use in laboratory, on production line, and in field for pharmaceutical, biotechnology, academic, government, environmental, and other research and industrial markets, as well as clinical laboratories.

Thermo Fisher Scientific Fundamentals Summary

How do Thermo Fisher Scientific's earnings and revenue compare to its market cap?
TMO fundamental statistics
Market CapUS$233.12b
Earnings (TTM)US$7.44b
Revenue (TTM)US$42.82b

31.3x

P/E Ratio

5.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
TMO income statement (TTM)
RevenueUS$42.82b
Cost of RevenueUS$22.84b
Gross ProfitUS$19.98b
Other ExpensesUS$12.54b
EarningsUS$7.44b

Last Reported Earnings

Jul 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)18.99
Gross Margin46.66%
Net Profit Margin17.37%
Debt/Equity Ratio71.2%

How did TMO perform over the long term?

See historical performance and comparison

Dividends

0.2%

Current Dividend Yield

6%

Payout Ratio

Does TMO pay a reliable dividends?

See TMO dividend history and benchmarks
When do you need to buy TMO by to receive an upcoming dividend?
Thermo Fisher Scientific dividend dates
Ex Dividend DateSep 14 2022
Dividend Pay DateOct 14 2022
Days until Ex dividend26 days
Days until Dividend pay date56 days

Does TMO pay a reliable dividends?

See TMO dividend history and benchmarks
We’ve recently updated our valuation analysis.

Valuation

Is TMO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for TMO?

Other financial metrics that can be useful for relative valuation.

TMO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue6.1x
Enterprise Value/EBITDA20.5x
PEG Ratio2.8x

Price to Earnings Ratio vs Peers

How does TMO's PE Ratio compare to its peers?

TMO PE Ratio vs Peers
The above table shows the PE ratio for TMO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average34.7x
DHR Danaher
34.5x7.7%US$214.1b
IQV IQVIA Holdings
38.4x18.5%US$44.5b
A Agilent Technologies
31.2x9.4%US$41.4b
WST West Pharmaceutical Services
34.8x9.0%US$23.8b
TMO Thermo Fisher Scientific
31.3x11.2%US$233.1b

Price-To-Earnings vs Peers: TMO is good value based on its Price-To-Earnings Ratio (31.3x) compared to the peer average (34.7x).


Price to Earnings Ratio vs Industry

How does TMO's PE Ratio compare vs other companies in the US Life Sciences Industry?

Price-To-Earnings vs Industry: TMO is good value based on its Price-To-Earnings Ratio (31.3x) compared to the US Life Sciences industry average (31.8x)


Price to Earnings Ratio vs Fair Ratio

What is TMO'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.

TMO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio31.3x
Fair PE Ratio30.9x

Price-To-Earnings vs Fair Ratio: TMO is expensive based on its Price-To-Earnings Ratio (31.3x) compared to the estimated Fair Price-To-Earnings Ratio (30.9x).


Share Price vs Fair Value

What is the Fair Price of TMO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: TMO ($595.01) is trading below our estimate of fair value ($666.65)

Significantly Below Fair Value: TMO is trading below fair value, but not by a significant amount.


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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Future Growth

How is Thermo Fisher Scientific forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


11.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TMO's forecast earnings growth (11.2% per year) is above the savings rate (1.9%).

Earnings vs Market: TMO's earnings (11.2% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: TMO's earnings are forecast to grow, but not significantly.

Revenue vs Market: TMO's revenue (5.4% per year) is forecast to grow slower than the US market (7.8% per year).

High Growth Revenue: TMO's revenue (5.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TMO's Return on Equity is forecast to be high in 3 years time (21.3%)


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Past Performance

How has Thermo Fisher Scientific performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


30.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: TMO has high quality earnings.

Growing Profit Margin: TMO's current net profit margins (17.4%) are lower than last year (22.5%).


Past Earnings Growth Analysis

Earnings Trend: TMO's earnings have grown significantly by 30.3% per year over the past 5 years.

Accelerating Growth: TMO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: TMO had negative earnings growth (-13.4%) over the past year, making it difficult to compare to the Life Sciences industry average (15.6%).


Return on Equity

High ROE: TMO's Return on Equity (17.5%) is considered low.


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Financial Health

How is Thermo Fisher Scientific's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: TMO's short term assets ($18.1B) exceed its short term liabilities ($11.0B).

Long Term Liabilities: TMO's short term assets ($18.1B) do not cover its long term liabilities ($37.1B).


Debt to Equity History and Analysis

Debt Level: TMO's net debt to equity ratio (66.8%) is considered high.

Reducing Debt: TMO's debt to equity ratio has reduced from 75.8% to 71.2% over the past 5 years.

Debt Coverage: TMO's debt is well covered by operating cash flow (29.2%).

Interest Coverage: TMO's interest payments on its debt are well covered by EBIT (19.4x coverage).


Balance Sheet


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Dividend

What is Thermo Fisher Scientific current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


0.20%

Current Dividend Yield

Upcoming Dividend Payment

TodayAug 19 2022Ex Dividend DateSep 14 2022Dividend Pay DateOct 14 202230 days from Ex DividendBuy in the next 26 days to receive the upcoming dividend

Dividend Yield vs Market

Notable Dividend: TMO's dividend (0.2%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.48%).

High Dividend: TMO's dividend (0.2%) is low compared to the top 25% of dividend payers in the US market (3.99%).


Stability and Growth of Payments

Stable Dividend: TMO is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: TMO is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Earnings Payout to Shareholders

Earnings Coverage: TMO is not paying a notable dividend for the US market.


Cash Payout to Shareholders

Cash Flow Coverage: TMO is not paying a notable dividend for the US market.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.7yrs

Average management tenure


CEO

Marc Casper (54 yo)

12.83yrs

Tenure

US$21,234,358

Compensation

Mr. Marc N. Casper has been the Chief Executive Officer and President of Thermo Fisher Scientific, Inc. since October 15, 2009 and has been its Chairman of the Board of Directors since February 26, 2020. M...


CEO Compensation Analysis

Compensation vs Market: Marc's total compensation ($USD21.23M) is above average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: Marc's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: TMO's management team is considered experienced (2.7 years average tenure).


Board Members

Experienced Board: TMO's board of directors are seasoned and experienced ( 11.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: TMO insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Thermo Fisher Scientific Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Thermo Fisher Scientific Inc.
  • Ticker: TMO
  • Exchange: NYSE
  • Founded: 1956
  • Industry: Life Sciences Tools and Services
  • Sector: Pharmaceuticals & Biotech
  • Implied Market Cap: US$233.118b
  • Shares outstanding: 391.79m
  • Website: https://www.thermofisher.com

Number of Employees


Location

  • Thermo Fisher Scientific Inc.
  • 168 Third Avenue
  • Waltham
  • Massachusetts
  • 2451
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/18 00:00
End of Day Share Price2022/08/18 00:00
Earnings2022/07/02
Annual Earnings2021/12/31


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.