Akcieatrhy (Akcieatrhy.cz)
Markets  |  January 22, 2013 10:36:49

Baxter International, Inc: title with currently low potential


In this paper, attention is paid to the U.S. Baxter International Inc. (BAX). The company develops and manufactures drugs. It focuses mainly on the drugs for hemophilia, immune disorders, infectious diseases, liver diseases, and other drugs against chronic and acute diseases.

Historical chart since 2004 shows that stocks BAX market is currently valued correctly. The company has financial results 24th January before the market opens and seems to pour into what is not. Shares has a nice dividend yield
and the projected increase in the range of 9.9% per year. However, an investor should do their own research and consider whether it is appropriate to take this investment opportunity or not.

Profits are correlated with the price of shares, as can be seen in the following chart. Orange line with triangles represents the historical earnings growth. The black line represents the value of the share price, and we see that both of these values ??are correlated. On all graphs, we see that the two figures are parallel. If the price deviates from the line of profits, essentially returning to it over time.

Profits and share price are mutually correlated

A quick look at historical earnings and share price development shows that both values ??are correlated. Shares BAX is currently due to gains evaluated correctly. Historical growth stocks is 9.9% per annum and PE = 14.8.
Analysts future growth at 10.4%, which means that the shares are currently valued by the market correctly. (Price is on the orange line indicating further growth).

Baxter International Inc.: Historical profits, Price, Dividends and P / E since 2004

Performance tables Baxter International Inc..

The following graph shows the performance shares and
dividends. It shows how historically appreciate income from shares and dividends. Payment of dividends is included in the total income, but dividends are not reinvested.

If you separate the dividend yields from yield stocks, it becomes apparent that a dividend is a significant additional revenue derived from ownership of shares. The overall evaluation of the corresponding 9.1% per annum (green oval), the initial amount of capital 1000 USD contribute dividend sum of $ 277.33 (blue highlight), which increases the yield of 9.1% to a total of 10.5% per year. In the same period, the index S & P 500 reviewed by only 4.8%.

Chart - Analysis of the last ten years - BAX

The following chart depicts the level of historical P / E (blue line) in relation to the values ??of ten-year U.S. Treasury bonds. The current level of P / E is roughly the same amount as in 2004.

Graph - the historical P / E

Another sign that the company is located in the area of good values ??can be shown on the graph present value P / S due to the historical value of P / S. The current value of P / S is now at a value of 2.62, which is the usual historical value.

Graph - P / S due to the historical value of P / S

The future development

Future long-term yields is entirely dependent on two major components:

First The historical growth curve of the company's profits
Second The price at which the share buy to be able to participate in those profits.

Predicting the growth of future profits, and the purchase of shares on the correct value of the principal criteria for a safe, prudent and profitable investment.

Graph estimated future profits of the company and the calculation of return is a simple but very effective tool that shows different possible scenarios and estimates of future development. Detailed view of these possible scenarios are another necessary step for judicious and prudent investment.

Consensus of 24 leading analysts, the company that publishes Capital IQ assumes that Baxter International Inc. in the long run growth rate of 8% per annum (orange circle). BAX has long-term debt of 44% and is at present P / E at 14.8. The value of P / E is currently correct. Levels of evaluation are indicated by five lines of orange with a peak P / E = 18 And based on expected earnings growth of 8% per year. Price should be in 2018 reach $ 106.89, which shows brown circle in the chart of future returns.This represents a 10.4% annualized return, including dividends (yellow highlight above).

Graph of future returns

Estimating future revenues

All companies derive their value from future revenues (quarterly earnings) which are able to generate their owners during its existence. Because the value of the company increases with increasing profits, we assume that the long term price will be close to the curve representing the future yield.

Given that each investor to invest in various instruments, it is appropriate to compare an investment in equities on its investment in less risky government bond. As shown in the following chart, comparing the investment in Baxter International Inc.. with investments in the U.S. ten-year government bond would yield that investment in shares will be approximately 5.1 times more successful (purple oval) than equally large investment in ten-year government bond . This comparison is the basis for thinking about investing in the title.

Summary and Conclusions

This article presents a fundamental view of the past and present stock assessment, based on historical profits of which were published in accordance with the rules of the stock market. Outlook for the future is based on the consensus of analysts. Even though it is a glimpse of the fundamentals, the reader can make a fairly accurate picture of the company. However, past performance is no guarantee of future performance, and readers should themselves carry out further analysis to ascertain whether the information in the article are sufficient or not.

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Baxter International, Inc: titul s aktuálně nízkým potenciálem

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