Becton Dickinson (BDX) is an American medical technology company founded in 1987 year. Employment around 45 000, operations in more than 190 countries. Key segments and revenues (including takeover of CareFusion in 2015 for $12.6b):

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Geographical split of sales:

  • US $5.1b
  • Europe $2.4b
  • Greater Asia $1.5b
  • Other $1.2b

Over the last years company significantly improved its’ portfolio – shift mainly to more advanced products/services:

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Capital allocation strategy assumes reinvestments – further growth expected, especially in Emerging Markets. I assume also some M&A.

 

As it comes to financials (estimates):

Market cap ~ $31B

Net debt ~$10B

Payout ratio ~30%

ROE ~11%

Beta = 1.0

Dividend yield 1.8%

 

Estimated valuation ratios:

EV/EBITDA = 11.5

P/E = 17.5

 

BDX is one of The Dividend Aristocrats with history of payments since 1972 year. Current dividend yield is around 1.8%, which is a little bit too less for me, but on the other hand payout ratio is relatively low. Historically company was paying even around 2.5% dividend yield – in 2012. I think such level would be acceptable for me taking into account high quality business.

 

Drawdown risk analysis:

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BDX share price is almost on all-time high levels. It is not interesting for me. In case of 20%+ drawdown I think I will reconsider buying shares. I think that levels around $100-$105 would be interesting for me – then dividend yield would be 2.5% and drawdown around 35%. For now low probability of such drawdown to happen, but I see no point in buying shares at $150.

 

Summing up, BDX is an awesome long term growing business but currently I see no point in buying shares…

 

Disclaimer BDX – no position