When I recently came across Baxter International Inc. (NYSE:BAX), I thought I might have a value stock. Although the stock had been down more than 59% over the last three years, the P/E (FWD) seemed reasonable at 17.7, and the company had
Baxter International: A Possible Value Trap
Summary
- Baxter International Inc. appeared undervalued with a P/E of 17.7 and over 2% dividend, but deeper analysis revealed it as a potential value trap.
- Despite strong revenue growth, Baxter struggles with profitability, high long-term debt, and a lack of forward growth.
- Baxter ranks well below the sector median on key forward metrics, with a 3-5Y EPS CAGR of -1%.
- Recent events, like the sale of its Kidney business and plant shutdown, add uncertainty, making it a risky investment despite initial value stock appearance.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.