Solventum Corp (SOLV) stock analysis

P/E above its 5-year median

Solventum's P/E of 99.6 is above its own 5-year median of 10.8.

P/E above the industry

Solventum's P/E of 99.6 is above the Surgical, Medical, and Dental Instruments and Supplies median of 27.7.

EV/EBITDA above its 5-year median

Solventum's EV/EBITDA of 20.2 is above its 5-year median of 9.2.

P/B below the industry

Solventum's price-to-book of 3.14 is below the Surgical, Medical, and Dental Instruments and Supplies median of 3.20.

Trading above fair value

The share price of $88.62 is above our fair value estimate of $46.13.

Margin of safety under 20%

The price is 92.1% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 0.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 4.5% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing slower than the industry

Revenue grew -2.8% over the last twelve months; the Surgical, Medical, and Dental Instruments and Supplies median is 11.0%.

Guidance raised

Solventum raised its full year 2026 organic sales growth outlook on Aug 5, 2026.

Gross margin improving

Gross margin was 54.8% over the last twelve months, against 54.1% a year earlier.

Return on equity under 15%

Return on equity was 3.2% over the last twelve months and averaged 17.0% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 4.7%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Solventum's return on equity of 3.2% is above the Surgical, Medical, and Dental Instruments and Supplies median of -32.4%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin below its 5-year average

Net margin was 1.9% over the last twelve months, against a 5-year average of 14.4%.

Net margin above the industry

Solventum's net margin of 1.9% is above the Surgical, Medical, and Dental Instruments and Supplies median of -14.1%.

High debt

Debt is 105% of shareholders' equity, above the 40% we consider low.

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 6.1% 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 1.03 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 1.85; above 3 is the safe zone and below 1.8 the distress zone.

No dividend

Solventum has not paid a dividend in the last twelve months.

Yield against Treasuries

No dividend.

Yield against the market

No dividend.

Dividend stability

No dividend.

Earnings cover

No dividend.

Cash-flow cover

No dividend.