Quest Diagnostics Incorporated's (NYSE:DGX) Stock Has Seen Strong Momentum: Does That Call For Deeper Study Of Its Financial Prospects?

Simply Wall St.11-15

Quest Diagnostics' (NYSE:DGX) stock is up by a considerable 5.0% over the past month. As most would know, fundamentals are what usually guide market price movements over the long-term, so we decided ...

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As most would know, fundamentals are what usually guide market price movements over the long-term, so we decided ...</p>\n\n<a href=\"https://finance.yahoo.com/news/quest-diagnostics-incorporateds-nyse-dgx-104634157.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Quest Diagnostics Incorporated's (NYSE:DGX) Stock Has Seen Strong Momentum: Does That Call For Deeper Study Of Its Financial Prospects?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nQuest Diagnostics Incorporated's (NYSE:DGX) Stock Has Seen Strong Momentum: Does That Call For Deeper Study Of Its Financial Prospects?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-15 18:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/quest-diagnostics-incorporateds-nyse-dgx-104634157.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Quest Diagnostics' (NYSE:DGX) stock is up by a considerable 5.0% over the past month. As most would know, fundamentals are what usually guide market price movements over the long-term, so we decided ...</p>\n\n<a href=\"https://finance.yahoo.com/news/quest-diagnostics-incorporateds-nyse-dgx-104634157.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1854104046.USD","symbol_name":"M&G (LUX) POSITIVE IMPACT \"A\" (USD) ACC","start_time":0,"source_url":"https://finance.yahoo.com/news/quest-diagnostics-incorporateds-nyse-dgx-104634157.html","article_id":"2483329933","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/wPCaEqo0Eoh8gNU.SS4ZzA--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/5bcfe52095f73041f79c669b593d7118"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2483329933","pubTimestamp":1731667594,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Quest Diagnostics'  stock is up by a considerable 5.0% over the past month. As most would know, fundamentals are what usually guide market price movements over the long-term, so we decided to look at the company's key financial indicators today to determine if they have any role to play in the recent price movement. In this article, we decided to focus on Quest Diagnostics'  ROE.ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital.Return on Equity = Net Profit  ÷ Shareholders' Equity. So, as a next step, we compared Quest Diagnostics' performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 5.4% over the last few years.Looking at its three-year median payout ratio of 37%","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1854104046.USD":"M&G (LUX) POSITIVE IMPACT \"A\" (USD) ACC","BK4588":"碎股","BK4583":"猴痘概念","DGX":"奎斯特诊疗","BK4196":"保健护理服务","BK4567":"ESG概念","LU1854103824.USD":"M&G (LUX) POSITIVE IMPACT \"A\" (USD) INC","BK4585":"ETF&股票定投概念","NYSE":"纽交所"},"translate_title":"Quest Diagnostics Incorporated（纽约证券交易所股票代码：DGX）的股票势头强劲：这是深入研究其财务前景的看涨期权吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DGX":1,"NYSE":1},"content_text":"Quest Diagnostics' (NYSE:DGX) stock is up by a considerable 5.0% over the past month. As most would know, fundamentals are what usually guide market price movements over the long-term, so we decided to look at the company's key financial indicators today to determine if they have any role to play in the recent price movement. In this article, we decided to focus on Quest Diagnostics'  ROE. \n ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital. \n See our latest analysis for Quest Diagnostics \n How To Calculate Return On Equity? \n The formula for return on equity is: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Quest Diagnostics is:\n13% = US$890m ÷ US$6.9b (Based on the trailing twelve months to September 2024).\n The 'return' refers to a company's earnings over the last year. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.13 in profit. \n What Is The Relationship Between ROE And Earnings Growth? \n We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or \"retain\", we are then able to evaluate a company's future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. \n A Side By Side comparison of Quest Diagnostics' Earnings Growth And 13% ROE \n At first glance, Quest Diagnostics seems to have a decent ROE. Even when compared to the industry average of 13% the company's ROE looks quite decent. However, while Quest Diagnostics has a pretty respectable ROE, its five year net income decline rate was 5.7% . So, there might be some other aspects that could explain this. These include low earnings retention or poor allocation of capital. \n So, as a next step, we compared Quest Diagnostics' performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 5.4% over the last few years. \n\n\n\n  NYSE:DGX Past Earnings Growth November 15th 2024\n \n\n Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. Is Quest Diagnostics fairly valued compared to other companies? These 3 valuation measures might help you decide. \n Is Quest Diagnostics Making Efficient Use Of Its Profits? \n Looking at its three-year median payout ratio of 37% (or a retention ratio of 63%) which is pretty normal, Quest Diagnostics' declining earnings is rather baffling as one would expect to see a fair bit of growth when a company is retaining a good portion of its profits. So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds. \n Additionally, Quest Diagnostics has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Existing analyst estimates suggest that the company's future payout ratio is expected to drop to 28% over the next three years. As a result, the expected drop in Quest Diagnostics' payout ratio explains the anticipated rise in the company's future ROE to 16%, over the same period. \n Conclusion \n In total, it does look like Quest Diagnostics has some positive aspects to its business. Although, we are disappointed to see a lack of growth in earnings even in spite of a high ROE and and a high reinvestment rate. We believe that there might be some outside factors that could be having a negative impact on the business. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2483329933"}