We believe Thermo Fisher Scientific stock (NYSE: TMO) is a better pick than its sector peer, Abbott stock (NYSE: ABT), given its better prospects. TMO trades at a slightly higher valuation multiple of 4.9x revenues vs. 4.4x for ABT due to its superior revenue growth. Looking at stock returns, both have underperformed vis-à-vis broader markets. While ABT is down 6% this year, TMO is up 1%, and the S&P500 index is up 18%. There is more to the comparison, and in the sections below, we discuss why we believe that TMO will offer better returns than ABT in the next three years. We compare a slew of factors, such as historical revenue growth, returns, and valuation, in an interactive dashboard analysis of Abbott vs. Thermo Fisher Scientific
TMO
Interestingly, ABT has had a Sharpe Ratio of 0.7 since early 2017, while the figure stood at 1.0 for TMO, higher than 0.6 for the S&P 500 Index over the same period. Still, they fall short of 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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