Thermo Fisher Scientific [NYSE:TMO] Dec. 5 (10:15AM), price: $31.45
52-week range: $26.65 (Nov. 21, 2008) - $62.75 (Aug. 18, 2008)
This company is the combination of Thermo Electron and Fisher Scientific which was purchased on November 9, 2006. They have two major business lines- Analytical Technologies and Laboratory Products and Services.
Business has been growing solidly despite the poor general economic conditions. September’s quarterly earnings were the 7th straight quarter with very positive year-over-year comparisons. 2008 will mark the 8th consecutive year of EPS increases.
Here are the per share results since 2001 as reported by Value Line. 2008 data includes current consensus figures for Q4.
Year …... Sales ….... C/F ….. EPS ….... B/V ….. Avg. P/E
2001 ….. 12.41 ….. 1.27 …. 0.69 ….. 10.82 …… 34.3x
2002 ….. 12.81 ….. 1.36 …. 0.88 ….. 12.49 …… 21.4x
2003 ….. 12.71 ….. 1.49 …. 1.10 ….. 14.44 …… 19.0x
2004 ….. 13.74 ….. 1.57 …. 1.24 ….. 16.60 …… 22.9x
2005 ….. 16.21 ….. 1.85 …. 1.54 ….. 17.19 …… 18.4x
2006 …... 9.10 …... 1.44 …. 1.79 ….. 33.37 …… 21.3x
2007 ….. 23.47 ….. 4.66 …. 2.65 ….. 34.89 …… 19.8x
2008 ….. 25.45 ….. 5.20 …. 3.14 ….. 35.60 …… 17.5x
Figures from 2006 reflect just 7 weeks as a combined entity while 2007 and 2008 numbers reflect the Fisher Scientific purchase on a full-year basis. Total shares outstanding went from 162.48 MM to 416.88 MM in late 2006 due to the stock issued in regards to the merger. [With the YE 2006 total share count expanded but the merged revenues only counted for seven weeks, thus the sales per share number looks artificially low for 2006].
Thermo’s balance sheet is in good shape with long-term debt at just 12% of capitalization and total interest coverage is > 12x. Value Line assigns TMO a ‘B++’ financial strength rating. Value Line also notes Thermo’s 95th percentile rankings for both ‘earnings predictability’ and ‘stock price growth persistence’. These shares have outperformed 95% of the 1700 company Value Line stock universe over the past decade.
At today’s quote of $31.45 TMO shares are offered at just 10x this year’s expected EPS of $3.14 and under 9x next year’s estimate of $3.50.
This is the lowest valuation for Thermo Fisher Scientific on record. Their 10-year median P/E has been 24x and Value Line is assuming an 18 multiple for their 3 – 5 year normalized projections.
TMO shares look to be a fine example of GARP (Growth at a Reasonable Price). This is a high-quality growth story at a decidedly non-premium price point right now.
Even 12 times next year’s consensus view of $3.50 EPS would bring TMO shares back to $42 or + 33.5% from today’s price. That’s a very low ball target as these shares touched highs of $46.30, $62, and $62.80 in 2006, 2007 and 2008 respectively when fundamentals were nowhere near as good as they are today.
Disclosure: Author bought shares of TMO earlier today.
52-week range: $26.65 (Nov. 21, 2008) - $62.75 (Aug. 18, 2008)
This company is the combination of Thermo Electron and Fisher Scientific which was purchased on November 9, 2006. They have two major business lines- Analytical Technologies and Laboratory Products and Services.
Business has been growing solidly despite the poor general economic conditions. September’s quarterly earnings were the 7th straight quarter with very positive year-over-year comparisons. 2008 will mark the 8th consecutive year of EPS increases.
Here are the per share results since 2001 as reported by Value Line. 2008 data includes current consensus figures for Q4.
Year …... Sales ….... C/F ….. EPS ….... B/V ….. Avg. P/E
2001 ….. 12.41 ….. 1.27 …. 0.69 ….. 10.82 …… 34.3x
2002 ….. 12.81 ….. 1.36 …. 0.88 ….. 12.49 …… 21.4x
2003 ….. 12.71 ….. 1.49 …. 1.10 ….. 14.44 …… 19.0x
2004 ….. 13.74 ….. 1.57 …. 1.24 ….. 16.60 …… 22.9x
2005 ….. 16.21 ….. 1.85 …. 1.54 ….. 17.19 …… 18.4x
2006 …... 9.10 …... 1.44 …. 1.79 ….. 33.37 …… 21.3x
2007 ….. 23.47 ….. 4.66 …. 2.65 ….. 34.89 …… 19.8x
2008 ….. 25.45 ….. 5.20 …. 3.14 ….. 35.60 …… 17.5x
Figures from 2006 reflect just 7 weeks as a combined entity while 2007 and 2008 numbers reflect the Fisher Scientific purchase on a full-year basis. Total shares outstanding went from 162.48 MM to 416.88 MM in late 2006 due to the stock issued in regards to the merger. [With the YE 2006 total share count expanded but the merged revenues only counted for seven weeks, thus the sales per share number looks artificially low for 2006].
Thermo’s balance sheet is in good shape with long-term debt at just 12% of capitalization and total interest coverage is > 12x. Value Line assigns TMO a ‘B++’ financial strength rating. Value Line also notes Thermo’s 95th percentile rankings for both ‘earnings predictability’ and ‘stock price growth persistence’. These shares have outperformed 95% of the 1700 company Value Line stock universe over the past decade.
At today’s quote of $31.45 TMO shares are offered at just 10x this year’s expected EPS of $3.14 and under 9x next year’s estimate of $3.50.
This is the lowest valuation for Thermo Fisher Scientific on record. Their 10-year median P/E has been 24x and Value Line is assuming an 18 multiple for their 3 – 5 year normalized projections.
TMO shares look to be a fine example of GARP (Growth at a Reasonable Price). This is a high-quality growth story at a decidedly non-premium price point right now.
Even 12 times next year’s consensus view of $3.50 EPS would bring TMO shares back to $42 or + 33.5% from today’s price. That’s a very low ball target as these shares touched highs of $46.30, $62, and $62.80 in 2006, 2007 and 2008 respectively when fundamentals were nowhere near as good as they are today.
Disclosure: Author bought shares of TMO earlier today.
