Tuesday, October 11, 2011

CR Bard (BCR) 2011 Review

C.R. Bard is a medical device manufacturer with products in four markets: vascular (angioplasty catheters and stents, grafts and blood oxygenation), urology (catheters, urine collection systems and incontinence aids), oncology (gastroenterological, bladder, prostate tests) and surgical specialties (hernia repair, orthopedic and laparoscopic products). The company produces a 20%+ return on equity and has grown earnings at approximately 17% for the past 10 years. Dividend growth has been slower but should pick up in the next 2 to 3 years.

As you can tell by its product mix, Bard is well situated to benefit from an aging population and should be able to maintain above average profit and dividend growth because:

(1) the company has a complete line of products of cost effective, high margin products that are primarily single use,

(2) a top notch R&D effort producing exciting a strong pipeline of new high margin proprietary products,

(3) strategic acquisitions to complement and enhance its current product line,

(4) an expanding marketing effort,

(5) an aggressive cost control program.


(1) an intensively competitive industry,

(2) a lackluster pricing environment,

(3) it is in a highly regulated industry.

BCR’s stock has been a stellar performer in our Portfolio having traded well past our Sell Half Price and is a great example of why we only sell half of a well performing position as long as the company continues to meet all our financial hurdles. While the current yield on the stock is only .8%, it yields 5% on our cost--again another great example of why we want to own the stocks of companies who consistently raise their dividend. The company is rated A++ by Value Line and has a 32% debt to equity ratio.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2001
BCR 0.8% 9% 10% 10
IND 1.3 8* 23 NA
Debt/Equity ROE EPS Down Since 2001 Net Margin Value Line Rating
BCR 32% 29% 0 21% A++
IND 36 20 NA 18 NA

*over 50% of the companies in this industry don’t pay a dividend


Notes: BCR stock made good progress off its March 2009 low, quickly surpassing the down trend off its September 2008 high (red line). It took much longer to challenge the November 2008 trading high (green line); in fact, the stock has struggled with this level and currently trades below it. Long term, the stock in is an up trend (straight blue lines); intermediate term it is also in an up trend (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio owns a one half position by virtue of it having hit its Sell Half Range in early 2008. However , the stock is back on the Dividend Growth Buy List and as noted above will be Bought this morning. The lower boundary of its Sell Half Range is $135.