Embecta Corp. (EMBC) stock analysis

P/E below its 5-year median

Embecta's P/E of 4.4 is below its own 5-year median of 10.5.

P/E below the industry

Embecta's P/E of 4.4 is below the Surgical, Medical, and Dental Instruments and Supplies median of 27.7.

EV/EBITDA below its 5-year median

Embecta's EV/EBITDA of 6.0 is below its 5-year median of 8.9.

P/S below the industry

Embecta's price-to-sales of 0.36 is below the Surgical, Medical, and Dental Instruments and Supplies median of 2.82 (book value is negative, so we use sales).

Trading below fair value

The share price of $6.53 is below our fair value estimate of $31.17.

Margin of safety over 20%

The price is 79.1% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -1.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -25.3% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 4.7% over the last twelve months, against a 5-year average of -25.9% a year.

Growing slower than the industry

Revenue grew -7.6% over the last twelve months; the Surgical, Medical, and Dental Instruments and Supplies median is 11.0%.

Guidance lowered

Embecta lowered its fiscal year 2026 revenue outlook on May 5, 2026.

Gross margin slipping

Gross margin was 59.0% over the last twelve months, against 62.8% a year earlier.

Return on equity

Needs positive equity and five years of results.

Return on capital over 10%

Return on invested capital was 26.2%, above the 10% that usually covers the cost of capital.

Return on equity against the industry

Needs positive equity.

Earnings shrank over 5 years

Net income shrank 25.9% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 8.6% over the last twelve months, against a 5-year average of 15.5%.

Net margin above the industry

Embecta's net margin of 8.6% is above the Surgical, Medical, and Dental Instruments and Supplies median of -14.1%.

Debt level

Needs debt and equity figures.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 12.0% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.68 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 1.33; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Embecta paid dividends worth 4.9% of the share price over the last twelve months.

Yield above Treasuries

The 4.9% yield is above the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 3.8% or more; Embecta yields 4.9%.

Dividend stability

Fewer than five years of dividend history.

Covered by earnings

Dividends take 31.1% of net income.

Covered by free cash flow

Dividends take 16.5% of free cash flow.