Baxter International

Methodology

Baxter International's medical products spanning renal care, hospital products, and pharmaceuticals provide relatively stable healthcare demand, though hospital capital spending cycles create some volatility. The company's spin-off of its BioPharma business into Baxalta (now part of Takeda) refocused operations on core medical products. This calculation works reasonably for Baxter's current portfolio, though restructuring and portfolio optimization create near-term complexity.

Methodology

Baxter's PEG ratio typically ranges from 1.5-2.5, reflecting moderate valuations for a diversified medical products company with steady but unspectacular growth. The company's defensive healthcare exposure and recurring revenue from consumables like dialysis products provide stability, but growth is constrained by mature markets. Compare to other diversified med-tech companies to assess whether Baxter's defensive characteristics justify its positioning versus higher-growth device makers.

Methodology

Baxter's dividend yield (around 2.0-3.0%) makes PEGY relevant for healthcare investors seeking income alongside stability. The company's commitment to dividends through restructuring and portfolio changes appeals to defensive investors. PEGY better captures Baxter's total return proposition as a mature medical products company where dividends complement modest growth, though dividend coverage and cash generation quality should be monitored given ongoing business transitions.