Investment Thesis
While Becton Dickinson demonstrates strong revenue growth (8.2% YoY) and excellent gross margins (82.4%), the company's fundamentals are deeply concerning with net margins of only 0.8%, an interest coverage ratio of 0.9x unable to cover debt service from operations, and liquidity ratios signaling cash constraints. The massive compression between 82.4% gross margin and 0.8% net margin, combined with flat net income growth despite revenue expansion, indicates severe structural profitability challenges.
Strengths
- Strong revenue growth of 8.2% YoY in capital-intensive medical devices sector
- Excellent gross margins of 82.4% demonstrating strong pricing power and core business quality
- Positive free cash flow generation of $424M providing operational cushion
Risks
- Interest coverage ratio of 0.9x - operating income cannot cover debt service, indicating unsustainable capital structure
- Net margin collapse to 0.8% despite strong gross margins reveals critical cost structure dysfunction
- Liquidity distress with current ratio of 0.94x and quick ratio of 0.55x limiting financial flexibility and refinancing options
Key Metrics to Watch
- Interest coverage ratio and debt refinancing ability
- Operating margin expansion and SG&A cost discipline
- Free cash flow conversion and working capital trends
Financial Metrics
Revenue
9.2B
Net Income
72.0M
EPS (Diluted)
$0.25
Free Cash Flow
424.0M
Total Assets
50.8B
Cash
813.0M
Profitability Ratios
Gross Margin
82.4%
Operating Margin
6.1%
Net Margin
0.8%
ROE
0.3%
ROA
0.1%
FCF Margin
4.6%
Balance Sheet & Liquidity
Current Ratio
0.94x
Quick Ratio
0.55x
Debt/Equity
0.61x
Debt/Assets
0.0%
Interest Coverage
0.92x
Long-term Debt
14.7B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T09:43:18.464136 |
Data as of: 2026-03-31 |
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