Mettler-Toledo International Inc.MTD

Morningstar Rating

Stock Research and Analysis

by Alex Morozov, CFA

Although Mettler Toledo's mature business model does not provide significant expansion opportunities, the company has been able to locate and take advantage of a few pockets of growth. If the firm continues on its current path of wisely deploying its Read more

Bulls Say

Mettler holds a top-three position in every product line it manufactures. The company's dominant position is particularly evident in laboratory weighing instruments, where its share is nearly 3 times larger than that of its biggest rival.

Mettler's management has so far been disciplined in its capital-allocation decisions. The firm has not expanded into product lines outside its realm of expertise, focusing instead on growing its share worldwide.

Internal efficiency projects, such as remote servicing of its instruments and a supply chain initiative, exemplify management's commitment to lowering costs.

The company's fastest-growing product line, pipettes, is also its most profitable, generating operating margins nearly 3 times greater than the rest of the business. Read more

Bears Say

The performance of Mettler's auto-chemistry segment remains sluggish, exhibiting slow revenue growth and operating margins in the low single digits.

Mettler is exposed to currency fluctuations, as more than 65% of its sales come from outside the U.S. Although currency has provided a boost to Mettler's operating results since 2007, a strong U.S. dollar will hurt the top line in 2009.

Mettler, unlike many mature businesses, does not pay dividends. We also think its capital structure is not optimal, as Mettler can support a greater degree of leverage without straining itself financially. Read more

Strategy

Mettler recently launched a project aimed at improving its customer relationships to achieve greater market penetration. The key components of this strategy are targeted marketing, continuing investment Read more

Management

We award Mettler an A Stewardship Grade, as the company's corporate governance policies are among the best in its industry. As part of the succession plan, Robert Spoerry left his post as CEO in January 2008 and was replaced by Olivier Filliol, a former Read more

Profile

Mettler-Toledo supplies weighing and precision instruments to customers in the life sciences, industrial, and food retail industries. Its products include laboratory and Read more

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