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US Equities · Finance research note

TMO — Thermo Fisher Scientific

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 17.89%
Profit Margins 15.15%
Return on Equity 13.52%
Return on Assets 5.0%
Free Float 0.37B
Dividend Yield 0.37%
Short Int % Utilisation 1.26%

2.2 Growth

Metric Value
Revenue Growth 6.2%
Free Cash Flow 5.52B
EBITDA 19.4 (Ratio)
Enterprise Value 219.17B
EV/Revenue 4.85
EV/EBITDA 19.4

Revenue growth of 6.2% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 26.60%
Risk / Std Dev (Ann.)* 30.48%
1-Year Price Return* 20.74%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $588.29
52-Week Range $435.27 – $643.99
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $44.56B $42.88B
Net income Reported net income $6.70B $6.33B
Total assets Year-end reported balance $110.34B $97.32B
Shareholders’ equity Year-end reported balance $53.41B $49.59B
Net margin Net income ÷ revenue 15.05% 14.77%
Asset turnover Revenue ÷ total assets 0.4038x 0.4406x
Equity multiplier Total assets ÷ shareholders’ equity 2.0661x 1.9627x
ROE Net margin × asset turnover × equity multiplier 12.55% 12.78%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $44.56B
Prior annual revenue $42.88B
EBIT $8.73B
Tax rate 7.50%
NOPAT = EBIT × (1 − tax rate) $8.07B
Forecast start-growth basis 3.91%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $8.07B
Add: depreciation & amortisation $2.78B
Less: capital expenditure -$1.52B
Less/(add): working-capital cash-flow movement -$1.77B
Current unlevered FCFF $7.56B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 3.91% $8.39B $2.89B -$1.58B -$1.84B $7.86B $7.54B
2 3.56% $8.69B $2.99B -$1.98B -$1.90B $7.80B $6.90B
3 3.21% $8.97B $3.09B -$2.39B -$1.96B $7.70B $6.28B
4 2.85% $9.22B $3.18B -$2.82B -$2.02B $7.56B $5.68B
5 2.50% $9.45B $3.26B -$3.26B -$2.07B $7.38B $5.11B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.85
Cost of equity 9.37%
Pre-tax cost of debt 4.02%
WACC 8.50%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $126.08B
Implied terminal EV / EBITDA 9.36x
Terminal value as % of enterprise value 72.68%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $31.52B
Present value of terminal value $83.84B
Indicated enterprise value $115.36B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $115.36B
Less: gross interest-bearing debt $39.38B
Add: cash and equivalents $10.11B
Add: affiliate investments $0.00
Less: minority interests $129.00M
Indicated common equity value $85.95B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 378,000,000.00
Share-count basis reported diluted weighted-average shares
Current market price $587.92
DCF indicative value per share $227.38
Indicative value vs. market price -61.32%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:50:59.655636 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha -7.28% 2.16%
Adjusted R² 0.17 0.21
Annualised residual volatility 27.26% 26.54%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 0.59 (3.65) 0.82 (4.55)
Size (SMB) 0.84 (3.88) 0.68 (2.97)
Value (HML) -0.25 (-1.32) -0.68 (-3.05)
Profitability (RMW) NM 0.18 (0.94)
Investment (CMA) NM 0.99 (2.99)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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