ABT, Abbott Laboratories
Abbott's* principal business is the discovery, development, manufacture, and sale of a broad and diversified line of healthcare products.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- A consumer-brand business, where the durable asset is the brand and its hold on the shelf.
- What moves the needle
- Volume against price, and shelf position. What decides it: whether it can raise prices without losing the customer, and whether the brand still commands its margin.
- Is it a good business?
- Return on capital has sat near the cost of capital (median 11%). Owner earnings agree: roughly 16% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the 10-K is where you look.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →61% of revenue comes from outside the United States.
- United States39%$17.1B
- All Other Countries36%$16.0B
- Germany6%$2.8B
- China4%$1.9B
- Switzerland4%$1.9B
- India4%$1.9B
- Other6%$2.8B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $20.9B | $27.4B | $30.6B | $31.9B | $34.6B | $43.1B | $43.7B | $40.1B | $42.0B | $44.3B | $45.1B |
| Gross marginGross mgn | 56% | 55% | 58% | 59% | 57% | 57% | 56% | 55% | 55% | 56% | 56% |
| Operating marginOp. mgn | 14.5% | 5.7% | 11.9% | 14.2% | 15.5% | 19.6% | 19.2% | 16.2% | 16.3% | 18.2% | 17.1% |
| Net incomeNet inc. | $1.4B | $477M | $2.4B | $3.7B | $4.5B | $7.1B | $6.9B | $5.7B | $13.4B | $6.5B | $6.3B |
| EPS (diluted)EPS | $0.94 | $0.27 | $1.34 | $2.07 | $2.52 | $3.95 | $3.93 | $3.27 | $7.67 | $3.73 | $3.59 |
| Owner earningsOwner earn. | $2.1B | $4.4B | $4.9B | $4.5B | $5.7B | $8.6B | $7.8B | $5.1B | $6.4B | $7.4B | $7.4B |
| ROICROIC | 11% | 2% | 6% | 9% | 11% | 16% | 16% | 12% | 13% | 11% | 7% |
| Cash & investmentsCash+inv | $18.8B | $9.6B | $4.1B | $4.1B | $7.1B | $10.2B | $10.2B | $7.3B | $8.0B | $8.9B | $7.3B |
| Net debt / (cash)Net debt | $1.9B | $18.1B | $15.3B | $13.8B | $11.4B | $7.8B | $6.6B | $7.4B | $6.2B | $4.0B | $26.8B |
| Dividends / shareDiv/sh | $1.04 | $1.06 | $1.12 | $1.27 | $1.43 | $1.79 | $1.88 | $2.03 | $2.19 | $2.35 | — |
| Book value / shareBVPS | $13.85 | $17.67 | $17.25 | $17.46 | $18.36 | $20.01 | $20.80 | $22.07 | $27.27 | $29.82 | $29.80 |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? 16.3×ComfortableOperating income $8.1B ÷ interest expense $493M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ConservativeTotal debt $12.9B ÷ operating income $8.1B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $4.0BModest net debtCash $8.5B + ST investments $417M − debt $12.9B
Netting $8.9B of cash and short-term investments against $12.9B of debt leaves $4.0B owed, about 0.5× a year's operating profit, versus the gross figure above. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Capital-hungryDSO 65 + DIO 123 − DPO 80 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- SolidNOPAT $6.2B ÷ invested capital $56.5B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $7.4B = operating cash $9.6B − capex $2.2B
What an owner could take out without starving the business. That's 17% of revenue. Treating stock comp as the real expense it is (less $664M of SBC) leaves $6.7B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $9.6B ÷ net income $6.5B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $5.0B ÷ Owner Earnings $7.4B
Of $7.4B Owner Earnings, $5.0B (68%) went back to shareholders, $4.1B dividends, $893M buybacks. Net of $664M stock comp, the real buyback was about $229M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? —Not enough data
The filing data didn't include the inputs for this check.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 2 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 15% (FY2016) → 18% (FY2025)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC 32%
Every extra dollar the company reinvested earned a high return, it is still compounding, not coasting on an old moat.
- Owner earnings growth +9%/yr
Free cash to owners grew about 9% a year over the record.
- Worst year 2017 · 5.7% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count +1.8%/yr
The share count is rising, dilution works against you on a per-share basis.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $74.6B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$17.7B · 24%
- Dividends$28.2B · 38%
- Buybacks$11.5B · 15%
- Retained (debt / cash)$17.2B · 23%
It reinvested $17.7B (24%) back into the business and returned $39.7B (53%) to owners, $28.2B in dividends, $11.5B in buybacks. Total debt rose $13.4B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio166:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$664M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 8% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
4 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $44.3B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity NearCurrent ratio ≥ 2× · 1.58×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt NearDebt ≤ working capital · $12.9B vs $9.5B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +504%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $3.73/share and book value $29.82/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Abbott Laboratories has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $7.4B on 1747M diluted shares; net debt $26.8B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionMD&A
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“Legislative Issues Abbott's primary markets are highly competitive and subject to substantial government regulations throughout the world.”
From the recordOperating margin17.1% now (TTM), off a 19.6% peak (FY2021) - Debt terms & refinancingRisk Factors
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“Morgan Trust Company, National Association, successor to Bank One Trust Company, N.A.) (including form of Security), filed as Exhibit 4.1 to the Abbott Laboratories Registration Statement on Form S-3 dated February 12, 2001. 4.2 * Supplemental Indenture dated as of February 27, 2006, between Abbott …”
From the recordBalance sheet (TTM)$4.0B modest net debt · interest covered 16.3× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“In a Missouri state case, a jury awarded a plaintiff $ 495 million in damages.”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyBusiness
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Regulations under federal, state, and various other countries' environmental laws impose stringent limitations on emissions and discharges to the environment from various manufacturing operations.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “In Abbott's Nutritional Products segment, total pediatric nutrition sales, excluding the impact of foreign exchange, decreased 0.7 percent in 2025, reflecting lower sales volumes in the U.S., partially offset by higher international sales and price increases.”
- “In 2025, interest expense decreased primarily due to the repayment of approximately $2.0 billion of long-term debt in November 2024, March 2025, and September 2025, as well as the maturity of an interest rate swap associated with the March 2025 debt.”
- “The sales decrease was partially offset by higher volume of routine diagnostic tests and the continued deployment of Abbott's Alinity testing platform and digital health solutions, as Abbott continues to expand its diagnostic test menus.”
- “Excluding the effect of foreign exchange, Diagnostic Products segment sales decreased 4.5 percent in 2025 and 3.9 percent in 2024 due to the continued decline in COVID-19 testing-related sales and challenging market conditions in China.”
- “Other, net also includes: in 2025, $ 165 million for legal reserves related to a negotiated settlement; in 2024, a $ 143 million loss on the divestiture of a non-core business, as well as intangible and IPR&D asset impairments; and in 2023, charges of $ 100 million related to intangible asset impair…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Pharma
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| LLYELI Lilly & Co | $65.2B | 83% | 40.9% | 35% | — |
| MRKMerck & Co., Inc. | $65.0B | 75% | 34.5% | 22% | 19% |
| PFEPfizer Inc. | $62.6B | 74% | 16.3% | 7% | 15% |
| ABBVAbbvie Inc. | $61.2B | 70% | 24.6% | 17% | 29% |
| BMYBristol-myers Squibb Company | $48.2B | 71% | 19.4% | 13% | 27% |
| ABTAbbott Laboratories | $44.3B | 56% | 18.2% | 11% | 17% |
| AMGNAmgen Inc. | $36.8B | 67% | 24.7% | 14% | 22% |
| GILDGilead Sciences, Inc. | $29.4B | 79% | 34.0% | 17% | 32% |