Following its most recent earnings release, Abbott Laboratories (NYSE:ABT) fell more than 4% as investors initially disliked the company's mixed results. In the week since, shares have rallied nearly back to the pre-earnings level. Looking deeper at the company's quarter shows that the company once again hit a homerun.

A look at results

Abbott Laboratories reported earnings results for the first quarter on April 20. Revenue grew 35.8% to $10.5 billion, but missed Wall Street analysts' estimates by $170 million. Adjusted earnings per share more than doubled to $1.32 and was 5 cents above estimates.

The company posted organic growth of 32.9%, which was an acceleration from 28.4% seen in the fourth quarter of last year.

Not surprisingly, Diagnostic remains the best-performing segment within the company as revenue topped $4 billion. Organic growth was almost 115%, with 123% growth in international markets. Demand for Abbott Laboratories' Covid-19 test, both the rapid and lab-based platforms, remains high. Rapid tests grew almost 300% and total testing revenue was $2.2 billion.

While Covid-related revenue grabbed the headlines, the other businesses within this segment did well, most notably Molecular Diagnostics, with 31.5% organic growth, and Core Laboratory Diagnostics, with 10.7% organic growth. Point of Care was lower year over year as weakness in the U.S. was only partially offset by gains in international markets.

Medical Devices advanced 8.8% to $3.3 billion. This segment was the most impacted by the pandemic last year as many elective procedures were canceled or delayed. Sales were in the red for almost all of 2020. In the first quarter, however, the majority of business units grew compared to the prior year, led by nearly a 24% increase in Diabetes Care. This segment's FreeStyle Libre and Libre Sense line of products represent some of the most innovative devices in the area of diabetes care and have demonstrated very high rates of growth since they were brought to market. Other businesses, such as Structural Heart and Rhythm Management, enjoyed bounce-back quarters as the health care system dealt with the pandemic. Some areas, such as Vascular and Heart Failure, remain challenged due to fewer procedures being performed.

Revenue for the Nutrition division was 6.4% higher to just over $2 billion. Adult continues to post double-digit growth rates due to increased market share for Ensure and Glucerna brands. The Pediatric business was down 2.5%, but this was primarily due to very strong sales in the first quarter of last year as both domestic and international customers stocked up on additional products in the early months of the pandemic.

Established Pharmaceuticals, which only operates in international markets, grew 6.2% to $1.1 billion. This segment was paced by a 6.7% improvement in key emerging markets, which include China, Russia, India and Brazil. While a weaker U.S. dollar acted as a tailwind to results, China, India and Brazil all showed growth from the prior year.

Abbott Laboratories' gross margin expanded 30 basis points to 58.3%, while selling, general and administrative expenses as a percentage of sales fell 710 basis points to 25.1%.

What likely prompted the selloff in the stock following earnings, besides the small revenue miss, was the 8.3% sequential decline in Covid-19 revenue even as demand for testing equipment more than doubled. As more people become vaccinated, the less testing will need to take place. That said, less than half of the U.S. population has received at least one dose of the vaccine and many around the world have yet to receive the first dose.

Still, investors only concerned with how much the pandemic has added to the business are missing the big picture with Abbott Laboratories. As with prior quarters, total revenue still grew 6.9% from the prior year, showing that the company remains more than just a Covid-19 story.

Abbott Laboratories reaffirmed that it expects adjusted earnings per share of at least $5 in 2021, which would be a 37% improvement from the prior year. Analysts surveyed by Yahoo Finance expect the company to produce adjusted earnings per share of $5.42 in 2022, which would be an 8.4% increase from company guidance for the current year. Much can happen over the course of a year, but analysts' forecasts show they expect Abbott Laboratories to show growth off a very high base.

Final thoughts

With Abbott Laboratories trading near $123, the stock has a forward price-earnings ratio of 24.6. This is a premium to the stock's average price-earnings ratio of 21.1 since spinning off AbbVie Inc. (NYSE:ABBV) in 2013.

Abbott Laboratories has one of the longer dividend growth streaks in the market with 49 years of increases. The company's businesses largely continue to accelerate, which provides support for a growing dividend.

Even with the stock trading at a higher-than-usual valuation, I believe Abbott Laboratories is one of the best investments in the market for those looking for both growth and income.

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