Mettler-Toledo (MTD)

Precision measurement company Mettler-Toledo (NYSE:MTD) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 7.9% year on year to $1.03 billion. On the other hand, next quarter’s revenue guidance of $1.08 billion was less impressive, coming in 2.4% below analysts’ estimates. Its non-GAAP profit of $11.15 per share was 4.5% above analysts’ consensus estimates.

Company Overview

With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE:MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail.

The life sciences subsector specializing in research tools and consumables enables scientific discoveries across academia, biotechnology, and pharmaceuticals. These firms supply a wide range of essential laboratory products, ensuring a recurring revenue stream through repeat purchases and replenishment. Their business models benefit from strong customer loyalty, a diversified product portfolio, and exposure to both the research and clinical markets. However, challenges include high R&D investment to maintain technological leadership, pricing pressures from budget-conscious institutions, and vulnerability to fluctuations in research funding cycles. Looking ahead, this subsector stands to benefit from tailwinds such as growing demand for tools supporting emerging fields like synthetic biology and personalized medicine. There is also a rise in automation and AI-driven solutions in laboratories that could create new opportunities to sell tools and consumables. Nevertheless, headwinds exist. These companies tend to be at the mercy of supply chain disruptions and sensitivity to macroeconomic conditions that impact funding for research initiatives.

Mettler-Toledo's competitors include Sartorius (OTC:SARTF), Thermo Fisher Scientific (NYSE:TMO), Shimadzu Corporation (OTC:SHMDF), and Agilent Technologies (NYSE:A), which all manufacture various types of precision instruments and analytical equipment.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $3.94 billion in revenue over the past 12 months, Mettler-Toledo has decent scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Mettler-Toledo’s sales grew at a mediocre 5.7% compounded annual growth rate over the last five years. This fell short of our benchmark for the healthcare sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Mettler-Toledo’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

Mettler-Toledo also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Mettler-Toledo’s organic revenue was flat. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Mettler-Toledo reported year-on-year revenue growth of 7.9%, and its $1.03 billion of revenue exceeded Wall Street’s estimates by 3.2%. Company management is currently guiding for a 3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months. While this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Mettler-Toledo’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 28% over the last five years. This profitability was top-notch for a healthcare business, showing it’s an well-run company with an efficient cost structure.

Analyzing the trend in its profitability, Mettler-Toledo’s operating margin of 27.6% for the trailing 12 months may be around the same as five years ago, but it has decreased by 2 percentage points over the last two years. This dynamic unfolded because it struggled to adjust its fixed costs while its demand plateaued.

In Q3, Mettler-Toledo generated an operating margin profit margin of 26.1%, down 3 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Mettler-Toledo’s EPS grew at a remarkable 11.5% compounded annual growth rate over the last five years, higher than its 5.7% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Diving into the nuances of Mettler-Toledo’s earnings can give us a better understanding of its performance. A five-year view shows that Mettler-Toledo has repurchased its stock, shrinking its share count by 15.1%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q3, Mettler-Toledo reported adjusted EPS of $11.15, up from $10.21 in the same quarter last year. This print beat analysts’ estimates by 4.5%. Over the next 12 months, Wall Street expects Mettler-Toledo’s full-year EPS of $41.84 to grow 7.8%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Mettler-Toledo has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 21.7% over the last five years, quite impressive for a healthcare business.

Mettler-Toledo’s free cash flow clocked in at $274.9 million in Q3, equivalent to a 26.7% margin. This result was good as its margin was 2.3 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Mettler-Toledo hasn’t been the highest-quality company lately, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 50.4%, splendid for a healthcare business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Mettler-Toledo’s ROIC averaged 1.1 percentage point decreases each year. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Mettler-Toledo reported $69.07 million of cash and $2.21 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.26 billion of EBITDA over the last 12 months, we view Mettler-Toledo’s 1.7× net-debt-to-EBITDA ratio as safe. We also see its $33.59 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing Mettler-Toledo beat analysts’ organic revenue expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed and its EPS guidance for next quarter fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $1,440 immediately following the results.

Updated: December 4, 2025 at 11:02 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Mettler-Toledo.

Mettler-Toledo isn’t a bad business, but we’re not clamoring to buy it here and now. Although its revenue growth was mediocre over the last five years, its stellar ROIC suggests it has been a well-run company historically. Investors should still be cautious, however, as Mettler-Toledo’s flat organic revenue disappointed.

Mettler-Toledo’s P/E ratio based on the next 12 months is 32.2x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $1,497 on the company (compared to the current share price of $1,420).