Quest Diagnostics Incorporated (DGX) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Quest Diagnostics Incorporated

Updated on October 23, 2026 · accounts published on October 22, 2026

Reading of October 22, 2026: A growing, cash-generative business carrying more debt than its sector likes

Quest Diagnostics trades at a P/E of 24.3 over the last 12 months, 28 % above its ten-year median of 19.0 but 22 % below its sector median.

• Is Quest Diagnostics expensive or cheap? Its P/E of 24.3 is 28 % above its ten-year median and higher than in 98 % of the last decade, yet 22 % below its sector.
• How is the business doing? Revenue grew 12 % and EPS 14 % over the last 12 months, but the 15 % operating margin is below its 16 % average since 2014.
• How strong is the balance sheet? Net debt of $61.05 per share equals 25 % of the price and 3.0× EBITDA in fiscal 2025, above the 2.5× healthcare benchmark.
• What to expect from the next earnings? Analysts expect EPS of $2.68 for the quarter due February 9, 2027, after 8 straight quarters of beating estimates.
• Does it invest enough in R&D and turn profit into cash? Free cash flow was 137 % of net income in fiscal 2025, well above the 90 % healthcare benchmark, with R&D at 0.0 % of revenue.

Is Quest Diagnostics expensive or cheap?

Over the last 12 months Quest Diagnostics trades at a P/E of 24.3, against a ten-year median of 19.0 and a decade range of 11.4 to 27.0. The stock has traded at a lower P/E 98 % of the time in the last decade, so by its own history it sits near the top. Against healthcare peers it looks more modest: the sector median P/E is 31.0 across 219 companies. A free cash flow yield of 7.1 % beats the 5.2 % earnings yield, a sign that cash backs the profits. After a 36 % rise in 12 months, the shares sit 2 % below their 52-week high of $247.45.

How is the business doing?

Growth has picked up: revenue rose 12 % and EPS 14 % over the last 12 months, after EPS fell 3.5 % a year between fiscal 2020 and 2025. Profitability has not kept pace. The operating margin of 15 % over the last 12 months matches fiscal 2025 and sits below the 16 % average of fiscal 2014-2025. ROIC of 8.6 % beats the sector median of 5.9 % by 2.7 points, but it cleared 10 % in only 2 of the last 10 fiscal years, with a low of 7.0 % in 2024. Net margin stands at 9.5 % and ROE at 15 %.

How strong is the balance sheet?

Debt is the main weight. In fiscal 2025 net debt reached $61.05 per share, 25 % of the current price, and 3.0× EBITDA, above the 2.5× that healthcare considers healthy. Debt to equity is 0.82 over the last 12 months. Short-term solvency is not a worry: the current ratio is 1.70, the Altman Z of 3.2 sits in the safe zone and the Piotroski score is 6 of 9. The dividend yields 1.4 % over the last 12 months, has risen for 11 consecutive fiscal years through 2025 and took 36 % of earnings in fiscal 2025, which leaves room to keep raising it.

What to expect from the next earnings?

Quest Diagnostics has beaten EPS estimates in each of the last 8 quarters, most recently on October 22, 2026, with $3.00 against $2.87 expected, a 4.5 % surprise. The next report is due on February 9, 2027, and analysts expect EPS of $2.68. Estimates are steady: the 2026 EPS consensus moved from $11.19 to $11.20 over the last 30 days across 11 analysts, and the revenue consensus barely changed. Of the 34 analysts covering the company, 13 recommend buying, 18 holding and 3 selling, a lukewarm stance for a stock trading near its 52-week high.

Does it invest enough in R&D and turn profit into cash?

Healthcare investors watch R&D and cash flow because expiring patents can wipe out revenue. Quest Diagnostics fails the R&D test, at 0.0 % of revenue in fiscal 2025 against a healthy 15 %, and its 32 % gross margin is far from the 70 % of branded pharma. Those thresholds are built for drug makers with patents to defend, a profile these figures do not show. It passes on cash: free cash flow equalled 137 % of net income in fiscal 2025, above the 90 % bar. It passes only one of seven sector checks, falling short on ROIC, EPS growth, debt and its P/E against the 18.8 decade average.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.