Mettler-Toledo International Inc.

Date: May 04, 2024.

Company’s Overview

Mettler-Toledo International Inc. (MTD) is a global leader in precision instruments for laboratories, industrial settings, and even food retail. They offer a wide range of scales, analyzers, and other tools used for research, quality control, manufacturing, and ensuring accurate weight in stores. Their reach spans the world, ensuring precise measurements wherever needed.

Competition

Revenue Segments

The Company’s net sales proportions by segment for the most recent quarterly report are composed by:

Related Risks

Economic downturns can lead to less spending on their instruments. Competition from other companies offering similar tools can threaten their market share. Stricter regulations or currency fluctuations can cause problems. Supply chain disruptions can make it difficult to get the parts they need or deliver their products. To stay on top, Mettler-Toledo focuses on innovation, expanding their offerings, building strong customer relationships, and navigating the complexities of the global market.

Financial Analysis

Company’s Revenues

Revenues from 2021 to 2023:

• Mettler-Toledo annual revenue for 2023 was $3.788B, a 3.35% decline from 2022.
• Mettler-Toledo annual revenue for 2022 was $3.92B, a 5.43% increase from 2021.
• Mettler-Toledo annual revenue for 2021 was $3.718B, a 20.51% increase from 2020.

The yearly revenue from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Company’s Net Income

Net Income from 2021 to 2023:

• Mettler-Toledo annual net income for 2023 was $0.789B, a 9.6% decline from 2022.
• Mettler-Toledo annual net income for 2022 was $0.873B, a 13.46% increase from 2021.
• Mettler-Toledo annual net income for 2021 was $0.769B, a 27.58% increase from 2020.

The yearly net income from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Company’s EPS

EPS from 2021 to 2023:

• Mettler-Toledo 2023 annual EPS was $35.9, a 6.53% decline from 2022.
• Mettler-Toledo 2022 annual EPS was $38.41, a 17.18% increase from 2021.
• Mettler-Toledo 2021 annual EPS was $32.78, a 31.59% increase from 2020.

Company’s Free Cash Flow

Free Cash Flow from 2021 to 2023:

• Mettler-Toledo annual free cash flow for 2023 was $0.861B, a 16.68% increase from 2022.
• Mettler-Toledo annual free cash flow for 2022 was $0.738B, a 8.28% decline from 2021.
• Mettler-Toledo annual free cash flow for 2021 was $0.805B, a 26.69% increase from 2020.

The yearly free cash flow from 2010 till 2023 is:

**The 2024 and 2025 values are the expected by the analysts

Shares Outstanding

In November 2022, MTD’s Board of Directors authorised an additional $2.5 billion to the share repurchase program, which had $2.6 billion of remaining availability as of December 31, 2023.

The Company has purchased 31.7 million of common shares since the inception of the program in 2004 through December 31, 2023

The Company overall has decreased its shares outstanding by almost 35% from 2009.

Asset/Liabilities & Current Ratio

Their asset-to-liability ratio of 0.96 indicates their assets are less than their liabilities. A higher ratio would provide a more comfortable buffer for unexpected costs or investments in new instruments. This could be especially important for maintaining their technological edge in a competitive environment focused on innovation.

The current ratio of 1.04 presents a similar picture. This metric measures a company’s ability to meet short-term obligations (debts due within a year) using short-term assets (cash, receivables). A ratio of 1.04, like Mettler-Toledo’s, suggests they have minimal wiggle room to cover their immediate financial needs. This could limit their flexibility in responding to unforeseen circumstances.

Valuation

Based on the analysis performed, MTD’s price is overvalued. As key metrics, we considered 10% Required Rate of Return (RRR) and 20% margin of safety. Note that in the analysis we take into consideration also the cash and cash equivalents and the total debt.

The company has received a range of ratings from buy to sell. Specifically, there were 1 buy, 0 overweight, 10 hold, 1 underweight and 1 sell ratings. The consensus rating leans toward hold.

Mettler-Toledo International Inc. presents a fascinating case for investors, boasting exceptional profitability across the board. Their superior gross and net profit margins of 59.16% and 20.82%, respectively, significantly outperform the industry averages of 46.15% and 12.23%. They’ve delivered consistent revenue growth (10-year CAGR of 4.3%), EPS growth (10-year CAGR of 12.18%), and free cash flow growth (10-year CAGR of 10.05%) over the past decade. Additionally, they’ve been aggressively reducing outstanding shares by 35% since 2009, strengthening their financial profile. However, two concerns cloud this otherwise bright picture.

The stock price appears overvalued, with a P/E ratio of 34.45 exceeding the industry median of 32.12. More importantly, their financial strength raises some red flags. The low asset-to-liability ratio of 0.96 and weak liquidity ratio (current ratio of 1.04) suggest limited resources for unexpected needs and potential difficulty adapting to changing market conditions.

Overall, Mettler-Toledo is a highly profitable leader in precision instruments. However, the premium valuation (P/E ratio of 34.45) and weak financial ratios (asset-to-liability ratio of 0.96 and current ratio of 1.04) warrant caution. Their ability to maintain margins and improve their financial flexibility will be key in justifying their current pricing.

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Disclaimer

Please note that I am not a licensed financial advisor and the information provided here should not be construed as financial advice. I am simply sharing my understanding of the topics based on my research and personal experiences. It is always advisable to consult with a qualified financial advisor before making any investment decisions.

The information I provide is based on publicly available sources and my own interpretations. I strive to provide accurate and up-to-date information, but I cannot guarantee the correctness or completeness of the information.

Any opinions expressed here are my own and do not necessarily reflect the views of any other individual or organisation.

Please use your own judgement and conduct your own research before making any investment decisions.