Thermo Fisher Scientific stock (NYSE: TMO) currently trades at $518 per share, about 5% lower than the level seen in early June 2022, just before the Fed started increasing rates, compared to 18% gains for the S&P 500 during this period. This underperformance of TMO stock can partly be attributed to declining sales of its Life Sciences segment due to lower COVID-19-related demand. Also, investors still have concerns about a potential recession despite a steady decline in the inflation rate in response to the Fed’s aggressive rate hike plan.
We note that TMO stock has had a Sharpe Ratio of 0.9 since early 2017, higher than 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
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