Solventum Corp (NYSE: SOLV)

Sector: Healthcare Industry: Medical Instruments & Supplies CIK: 0001964738
Market Cap 13.61 Bn
P/B 2.73
P/E 8.93
P/S 1.62
ROIC (Qtr) 5.22
Div Yield % 0.00
Rev 1y % (Qtr) 0.67
Total Debt (Qtr) 5.14 Bn
Debt/Equity (Qtr) 1.03

About

Price action

Investment thesis

Bull case

  • Tangible assets of 6.49B provide exceptional 11.27x coverage of deferred revenue 576M, showing strong service capability backing.
  • Robust tangible asset base of 6.49B provides 4.42x coverage of working capital 1.47B, indicating strong operational backing.
  • Operating cash flow of 493M fully covers other non-current liabilities 336M by 1.47x, showing strong long-term stability.
  • R&D investment of 764M represents healthy 1.33x of deferred revenue 576M, indicating strong future innovation pipeline.
  • Cash reserves of 1.64B provide solid 4.89x coverage of other non-current liabilities 336M, indicating strong liquidity.

Bear case

  • Operating cash flow of 493M barely covers its investment activities of 3.42B, with a coverage ratio of 0.14, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 1.64B provide limited coverage of acquisition spending of 3.87B, which is 0.42x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 493M provides insufficient coverage of deferred revenue obligations of 576M, which is 0.86x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 493M shows concerning coverage of stock compensation expenses of 149M, with a 3.31 ratio indicating potential earnings quality issues.
  • Free cash flow of 50M provides weak coverage of capital expenditures of 443M, with a 0.11 ratio suggesting additional external financing needs for growth initiatives.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Medical Instruments & Supplies
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ISRG Intuitive Surgical Inc 174.27 Bn 61.02 17.31 0.00 Bn
2 BDX Becton Dickinson & Co 59.72 Bn 37.77 3.14 19.18 Bn
3 RMD Resmed Inc 39.76 Bn 26.76 7.37 0.85 Bn
4 ALC Alcon Inc 38.93 Bn 37.18 3.82 5.24 Bn
5 WST West Pharmaceutical Services Inc 17.69 Bn 133.13 12.54 0.30 Bn
6 HOLX Hologic Inc 16.81 Bn 30.91 4.07 2.52 Bn
7 COO Cooper Companies, Inc. 16.37 Bn 43.67 4.00 2.51 Bn
8 ALGN Align Technology Inc 13.73 Bn 36.29 3.45 0.09 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.50 2.75
EV to Cash from Ops. EV/CFO 42.45 39.87
EV to Debt EV to Debt 4.07 27.09
EV to EBIT EV/EBIT 10.10 32.86
EV to EBITDA EV/EBITDA 17.50 19.31
EV to Free Cash Flow [EV/FCF] EV/FCF 418.59 0.88
EV to Market Cap EV to Market Cap 1.54 -4.26
EV to Revenue EV/Rev 2.49 252.61
Price to Book Value [P/B] P/B 2.73 6.13
Price to Earnings [P/E] P/E 8.93 184.03
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -1.09
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 1.36
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.74
Interest Coverage Int. cover (Qtr) 5.14 -117.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -29.91 -53.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 112.69 414.02
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -1.48
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 107.81 -57.42
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -35.35 -106.89
EBIT Growth (1y) % EBIT 1y % (Qtr) 66.69 -37.00
EBT Growth (1y) % EBT 1y % (Qtr) 69.79 -42.63
EPS Growth (1y) % EPS 1y % (Qtr) 110.84 -15.05
FCF Growth (1y) % FCF 1y % (Qtr) -95.73 56.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -1.92 67.95
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.60 0.54
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.56 2.51
Current Ratio Curr Ratio (Qtr) 1.50 7.80
Debt to Equity Ratio Debt/Equity (Qtr) 1.03 0.55
Interest Cover Ratio Int Coverage (Qtr) 5.14 -117.83
Times Interest Earned Times Interest Earned (Qtr) 5.14 -117.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 30.90 -2,368.59
EBIT Margin % EBIT Margin % (Qtr) 24.66 -2,472.59
EBT Margin % EBT Margin % (Qtr) 19.86 -2,442.52
Gross Margin % Gross Margin % (Qtr) 54.10 30.06
Net Profit Margin % Net Margin % (Qtr) 18.10 -2,438.49