Benzinga | Aug 3, 2021 10:23AM EDT

Price Over Earnings Overview: Becton, Dickinson





Looking into the current session, Becton, Dickinson Inc. (NYSE:BDX) shares are trading at $257.45, after a 0.52% gain. Moreover, over the past month, the stock went up by 3.25%, but in the past year, fell by 9.17%. Shareholders might be interested in knowing whether the stock is undervalued, even if the company is performing up to par in the current session.

The stock is currently above its 52 week low by 17.29%. Assuming that all other factors are held constant, this could present itself as an opportunity for investors trying to diversify their portfolio with Health Care Equipment & Supplies stocks, and capitalize on the lower share price observed over the year.

The P/E ratio is used by long-term shareholders to assess the company's market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E can either represent a company's poor future earnings potential or a buying opportunity relative to other stocks. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

Depending on the particular phase of a business cycle, some industries will perform better than others.

Compared to the aggregate P/E ratio of the 147.93 in the Health Care Equipment & Supplies industry, Becton, Dickinson Inc. has a lower P/E ratio of 45.82. Shareholders might be inclined to think that the stock might perform worse than its industry peers. It's also possible that the stock is undervalued.

There are many limitations to price to earnings ratio. It is sometimes difficult to determine the nature of the earnings makeup of a company. Shareholders might not get what they're looking for, from trailing earnings.