BDX, Becton Dickinson & Co
We sell products to researchers at pharmaceutical and biotechnology companies, academic institutions, government laboratories and private foundations.
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 capital-intensive business, run on heavy physical assets that have to be kept working.
- What moves the needle
- How hard the assets work, and what the inputs cost. What decides it: utilization, how much of the capex merely keeps the assets running, and what a downturn does to a heavy fixed-cost base.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median 5%, above 15% in 0 of 10 years). Owner earnings agree: roughly 15% 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 →41% of revenue comes from outside the United States.
- United States59%$12.8B
- EMEA22%$4.7B
- Asia14%$3.1B
- Other6%$1.2B
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 | $12.5B | $12.1B | $16.0B | $17.3B | $16.1B | $19.1B | $18.9B | $19.4B | $20.2B | $21.8B | $22.2B |
| Operating marginOp. mgn | 11.5% | 12.6% | 9.4% | 10.2% | 5.7% | 11.8% | 12.1% | 10.9% | 11.9% | 11.8% | 11.1% |
| Net incomeNet inc. | $976M | $1.1B | $311M | $1.2B | $874M | $2.1B | $1.8B | $1.5B | $1.7B | $1.7B | $1.1B |
| EPS (diluted)EPS | $4.49 | $4.92 | $1.18 | $4.49 | $3.09 | $7.16 | $6.19 | $5.15 | $5.86 | $5.82 | $4.00 |
| Owner earningsOwner earn. | $1.9B | $1.8B | $2.0B | $2.4B | $2.8B | $3.5B | — | — | — | — | $3.9B |
| ROICROIC | 7% | 9% | 2% | 4% | 2% | 6% | 5% | 5% | 5% | 5% | 5% |
| CapexCapex | $693M | $727M | $895M | $957M | $769M | $1.2B | $973M | $874M | $725M | $760M | $774M |
| Capex / revenueCapex/rev | 5.6% | 6.0% | 5.6% | 5.5% | 4.8% | 6.2% | 5.2% | 4.5% | 3.6% | 3.5% | 3.5% |
| Capex vs depreciationCapex/dep | 0.62× | 0.67× | 0.45× | 0.42× | 0.36× | 0.54× | 0.44× | 0.38× | 0.32× | 0.31× | 0.31× |
| Total debtDebt | $11.6B | $18.9B | $21.5B | $19.4B | $17.9B | $17.6B | $16.1B | $15.9B | $20.1B | $19.2B | $17.3B |
| Cash & investmentsCash+inv | $1.6B | $14.2B | $1.2B | $566M | $2.8B | $2.3B | $1.0B | $1.4B | $2.2B | $649M | $816M |
| Net debt / (cash)Net debt | $10.0B | $4.7B | $20.3B | $18.8B | $15.1B | $15.3B | $15.1B | $14.5B | $17.9B | $18.5B | $16.5B |
Owner’s Scorecard
Will it survive?
- AdequateOperating income $2.6B ÷ interest expense $613M
Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.
- HighTotal debt $19.2B ÷ operating income $2.6B
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 $18.5BHeavy net debtCash $641M + ST investments $8M − debt $19.2B
Netting $649M of cash and short-term investments against $19.2B of debt leaves $18.5B owed, about 7.2× 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 50 + DIO 119 − DPO 60 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?
- Below averageNOPAT $2.3B ÷ invested capital $43.9B (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 $3.9B = operating cash $4.6B − capex $760M
What an owner could take out without starving the business. That's 18% of revenue. Treating stock comp as the real expense it is (less $258M of SBC) leaves $3.6B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $4.6B ÷ net income $1.7B
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 $2.2B ÷ Owner Earnings $3.9B
Of $3.9B Owner Earnings, $2.2B (56%) went back to shareholders, $1.2B dividends, $1.0B buybacks. Net of $258M stock comp, the real buyback was about $742M. 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? 0.31×HarvestingCapex $760M ÷ depreciation $2.5B
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
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% 0 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 11% (FY2016) → 12% (FY2025)
Margins held roughly steady across the record.
- Reinvestment, incremental ROIC 5%
Reinvested capital earned only a modest return, growth is getting expensive.
- Owner earnings growth +6%/yr
Free cash to owners grew about 6% a year over the record.
- Worst year 2020 · 5.7% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count +3.2%/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, 2016–2021
Over the record, the business generated $19.5B 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$5.2B · 27%
- Dividends$5.2B · 27%
- Buybacks$2.0B · 10%
- Retained (debt / cash)$7.1B · 36%
It reinvested $5.2B (27%) back into the business and returned $7.2B (37%) to owners, $5.2B in dividends, $2.0B in buybacks. Total debt rose $5.7B 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 ratio374:1
What the chief earns for every dollar the median employee makes, per the 2025 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$258M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 10% 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 · $21.8B
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 MissCurrent ratio ≥ 2× · 1.11×
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 MissDebt ≤ working capital · $19.2B vs $942M 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 · +104%
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 $5.82/share and book value $88.00/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 Becton Dickinson & Co 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 $3.9B on 285M diluted shares; net debt $16.5B. 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.
- Customer concentrationRisk Factors
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“No customer accounted for 10% or more of revenues in any of the three years presented.”
From the recordRevenue exposed (TTM)$22.2B - 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.
“Group purchasing organizations and integrated health delivery networks have also served to concentrate purchasing decisions for some customers, which has led to downward pricing pressure for medical device suppliers.”
From the recordOperating margin11.1% now (TTM), off a 12.6% peak (FY2017) - Supplier & input dependenceBusiness
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“Our reliance on sole suppliers can create greater exposure to shortages, magnify price swings and increase the difficulty of negotiating favorable terms.”
From the recordGross-margin cushion (TTM)47% - Debt terms & refinancingBusiness
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“In addition, the agreements also require us to comply with certain financial covenants, including financial ratios.”
From the recordBalance sheet (TTM)$18.5B heavy net debt · interest covered 4.2× - 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.
“Notes to Consolidated Financial Statements — (Continued) Becton, Dickinson and Company On May 2, 2025, the compensatory phase of the first trial in these cases resulted in the jury awarding the plaintiff $ 20 million in compensatory damages with the matter proceeding to a punitive phase.”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyRisk Factors
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“In fiscal year 2023, the Company recorded expenses of $ 46 million within Loss from Discontinued Operations, Net of Tax related to a foreign tax associated with the April 1, 2022 spin-off of the Company's former Diabetes Care business as a separate publicly traded company named Embecta.”
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.
- “The ultimate impact of any existing or new tariffs or other changes in international trade policies on our business, financial condition, results of operations and cash flows is subject to a number of factors, including, but not limited to, the duration of such tariffs, changes in tariff rates, the …”
- “Among other things, the ID requires medical device sterilization facilities to comply with a new and stricter occupational ethylene oxide exposure limit, establish engineering controls for worker protection, provide workers with personal protective equipment, conduct continuous stationary indoor mon…”
- “The development, deployment and use of AI in our products and business operations generally could result in regulatory action, legal liability, operational challenges or reputational harm and our failure to adapt to medical technology industry trends and developments related to AI in a timely manner…”
- “Department of Commerce recently initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into (among other things) imports of personal protective equipment, medical consumables and medical equipment (including devices), to determine whether they threaten U.S. nati…”
- “The effects of regulatory or other events that adversely impact our supply chain, including our ability to manufacture or sterilize our products (particularly where production of a product line or sterilization operations are concentrated in one or a few plants), source materials or components or se…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Medical devices
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 |
|---|---|---|---|---|---|
| MDTMedtronic PLC | $33.5B | 65% | 17.8% | 7% | 15% |
| SYKStryker Corp | $25.1B | 64% | 19.5% | 10% | 17% |
| MMM3M Company | $24.9B | 40% | 18.6% | 24% | 6% |
| BDXBecton Dickinson & Co | $21.8B | 45% | 11.8% | 5% | 18% |
| BSXBoston Scientific Corp | $20.1B | 69% | 18.0% | 9% | 18% |
| BAXBaxter International Inc | $11.2B | 30% | -2.7% | -2% | 3% |
| ISRGIntuitive Surgical, Inc. | $10.1B | 66% | 29.3% | 18% | 25% |
| ZBHZimmer Biomet Holdings, Inc. | $8.2B | 70% | 13.3% | 5% | 18% |