Despite a 7.0% drop in its share price over the past month, Abbott Laboratories (NYSE:ABT) is showing signs of strong financial health that could potentially lead to an increase in its long-term value. The company's return on equity (ROE) and earnings growth are particularly noteworthy.
The ROE, a measure of how efficiently a company's management is utilizing its capital, stands at 14% for Abbott Laboratories. In practical terms, this means that for every $1 worth of equity, the company was able to earn $0.14 in profit.
Abbott Laboratories' ROE is notably higher than the average industry ROE of 9.2%, which likely contributed to the company's significant 28% net income growth over the past five years.
In comparison with the industry's growth rate of 9.3% over the same five-year period, Abbott Laboratories' growth figure is higher. The company's three-year median payout ratio stands at 49%, indicating that it is retaining 51% of its profits.
Abbott Laboratories has consistently paid dividends for at least ten years, underscoring its commitment to sharing profits with shareholders. Analysts predict that the company's future payout ratio over the next three years will be approximately 44%. Despite this, forecasts suggest that Abbott Laboratories' future ROE will rise to 20%.
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