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Should Abbott India Limited (NSE:ABBOTINDIA) Be Your Next Stock Pick?

Simply Wall St

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Abbott India Limited (NSE:ABBOTINDIA) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of ABBOTINDIA, it is a financially-robust company with an impressive track record and a excellent future outlook. Below, I've touched on some key aspects you should know on a high level. For those interested in digger a bit deeper into my commentary, take a look at the report on Abbott India here.

Flawless balance sheet with high growth potential

Investors in search for stocks with room to flourish should look no further than ABBOTINDIA, with its expected earnings growth of 22% underlying the notable 28% return on equity over the next few years leading up to 2022. Over the past year, ABBOTINDIA has grown its earnings by 27%, with its most recent figure exceeding its annual average over the past five years. The strong earnings growth is reflected in impressive double-digit 25% return to shareholders, which is what investors like to see!

NSEI:ABBOTINDIA Past and Future Earnings, May 23rd 2019

ABBOTINDIA's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that ABBOTINDIA has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. Looking at ABBOTINDIA's capital structure, the company has no debt on its balance sheet. This means it is running its business only on equity capital funding, which is rather impressive for a ₹163b market cap company. Investors’ risk associated with debt is virtually non-existent and the company has plenty of headroom to grow debt in the future, should the need arise.

NSEI:ABBOTINDIA Historical Debt, May 23rd 2019

Next Steps:

For Abbott India, there are three relevant factors you should further research:

  1. Valuation: What is ABBOTINDIA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ABBOTINDIA is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does ABBOTINDIA return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from ABBOTINDIA as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ABBOTINDIA? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.