Thermo Fisher Scientific Inc. (NYSE: TMO)

Sector: Healthcare Industry: Diagnostics & Research CIK: 0000097745
Market Cap 234.48 Bn
P/B 4.60
P/E 35.69
P/S 5.36
ROIC (Qtr) 7.72
Div Yield % 0.34
Rev 1y % (Qtr) 4.94
Total Debt (Qtr) 35.68 Bn
Debt/Equity (Qtr) 0.70

About

Thermo Fisher Scientific Inc., often recognized by its stock symbol TMO, is a prominent player in the biotechnology, pharmaceutical, and healthcare industries. The company is dedicated to enabling its customers to make the world healthier, cleaner, and safer by providing an unparalleled combination of innovative technologies, convenient purchasing options, and pharmaceutical services through its industry-leading brands. Thermo Fisher operates in various business segments, each contributing significantly to its revenue generation. These segments...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 7.65B provides exceptional 1530.20x coverage of minority interest expenses 5M, showing strong core operations.
  • Operating cash flow of 7.65B provides strong 25.09x coverage of stock compensation 305M, indicating sustainable incentive practices.
  • Tangible assets of 37.49B provide exceptional 13.15x coverage of deferred revenue 2.85B, showing strong service capability backing.
  • Robust free cash flow of 6.14B exceeds capital expenditure of 1.51B by 4.08x, indicating strong organic growth funding capability.
  • Retained earnings of 57.35B provide full 1.80x coverage of long-term debt 31.86B, indicating strong internal capital position.

Bear case

  • Operating cash flow of 7.65B barely covers its investment activities of (4.92B), with a coverage ratio of -1.56, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (4.92B) provide weak support for R&D spending of 1.41B, which is -3.48x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 7.65B provides thin coverage of dividend payments of (623M) with a -12.28 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.98B provide limited coverage of acquisition spending of (4.04B), which is -0.49x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 6.14B represents just -7.81x of debt issuance (787M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Geographical Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Diagnostics & Research
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TMO Thermo Fisher Scientific Inc. 234.48 Bn 35.69 5.36 35.68 Bn
2 DHR Danaher Corp /De/ 171.11 Bn 48.85 7.05 16.86 Bn
3 IDXX Idexx Laboratories Inc /De 57.62 Bn 56.08 13.83 1.09 Bn
4 IQV Iqvia Holdings Inc. 42.37 Bn 33.03 2.66 15.19 Bn
5 A Agilent Technologies, Inc. 42.16 Bn 32.36 6.07 3.35 Bn
6 NTRA Natera, Inc. 31.64 Bn -102.32 14.95 0.18 Bn
7 MTD Mettler Toledo International Inc/ 30.89 Bn 36.96 7.84 2.21 Bn
8 WAT Waters Corp /De/ 23.59 Bn 36.37 7.60 1.49 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.57 2.82
EV to Cash from Ops. EV/CFO 34.65 19.55
EV to Debt EV to Debt 7.43 54.87
EV to EBIT EV/EBIT 31.25 18.82
EV to EBITDA EV/EBITDA 25.73 4.36
EV to Free Cash Flow [EV/FCF] EV/FCF 43.15 17.63
EV to Market Cap EV to Market Cap 1.13 1.58
EV to Revenue EV/Rev 6.06 5.06
Price to Book Value [P/B] P/B 4.60 1.35
Price to Earnings [P/E] P/E 35.69 18.88
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 10.55 -2.00
Dividend Payout Ratio % Div Payout % (Qtr) 9.70 2.86
Dividend per Basic Share Div per Share (Qtr) 1.68 0.19
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 10.33 1.94
Interest Coverage Int. cover (Qtr) 6.19 -128.90
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -18.21 -35.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -57.33 23.84
Dividend Growth (1y) % Div 1y % (Qtr) 10.53 0.25
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 5.03 9.72
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -0.74 -444.66
EBIT Growth (1y) % EBIT 1y % (Qtr) 2.97 8.29
EBT Growth (1y) % EBT 1y % (Qtr) 4.97 -6.03
EPS Growth (1y) % EPS 1y % (Qtr) 8.44 15.59
FCF Growth (1y) % FCF 1y % (Qtr) -21.48 56.57
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.49 185.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.42 0.57
Cash Payout Ratio Cash Payout (Qtr) 0.07 0.01
Cash Ratio Cash Ratio (Qtr) 0.13 1.23
Current Ratio Curr Ratio (Qtr) 1.50 2.70
Debt to Equity Ratio Debt/Equity (Qtr) 0.70 -0.84
Interest Cover Ratio Int Coverage (Qtr) 6.19 -128.90
Times Interest Earned Times Interest Earned (Qtr) 6.19 -128.90
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 25.80 -97.22
EBIT Margin % EBIT Margin % (Qtr) 19.40 -115.64
EBT Margin % EBT Margin % (Qtr) 16.27 -114.24
Gross Margin % Gross Margin % (Qtr) 41.30 44.76
Net Profit Margin % Net Margin % (Qtr) 15.00 -113.12