Medtronic PLC 2

Sound bite for Twitter and StockTwits is: Cheap to reasonable. On some levels this stock is quite cheap. It would appear to mostly below the relative mean. See my spreadsheet on Medtronic PLC.

I do not own this stock of Medtronic Inc. (NYSE-MDT). In 2009 I was looking for a good US stock for my US$ account. I had heard good things about this stock and also it is in Health Care sector which is a weak sector in Canada. This is one of the few US stocks that I follow. Their financial year is April 30 each year.

There is not much insider ownership, but this company is worth around $104B. The amount of stock options granted, especially in the last two years seem quite high to me. However, the company does not seem to separate stock options from ESPP stock. This year some 17M stock options and shares via ESPP were granted which is some 1.2% of the outstanding shares. The book value of these shares was $1.1B. This number of shares was worth $1.2B at the end of April 2015 financial year.

The 5 year low, median and high Price/Earnings per Share Ratios are 10.91, 12.77 and 14.64. The corresponding 10 year Ratios are higher at 14.04, 19.10 and 21.58. The P/E Ratios have been decreasing lately. Note that the historical median P/E Ratio is 25.96. The current P/E Ratio is 22.81 based on a stock price of $73.69 and 2016 EPS estimate of $3.23. By the 10 year measuring stick, this testing suggests that the stock price is relatively expensive.

I get a Graham Price of $51.96. The 10 years low, median and high median Price/Graham Price Ratio is 1.19, 1.51 and 1.74. The current P/GP Ratio is 1.42 based on a stock price of $73.69. This stock price testing suggests that the stock price is relatively reasonable and below the relative median.

The 10 year Price/Book Value per Share Ratio is 2.86. The current P/B Ratio is 1.98 a value some 31% lower. The current P/B Ratio is based on BVPS of $37.15 and a stock price of $73.69. This stock price testing suggests that the stock price is relatively cheap.

The 5 year median Dividend Yield is 2.46%. The current Dividend Yield at 2.06% is some 16% lower. This stock price testing suggests that the stock price is relatively reasonable, but above the relative median.

However, on a historical basis, the current dividend yield is very high. The historical median dividend yield is just 0.72% a value that is some 172% lower than the current dividend yield of 2.06%. On this level the stock price is getting cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold Recommendations. Most of the recommendations are a Buy. The consensus recommendation is a Buy. The 12 month consensus stock price is $86.20. This implies a total return of 19.04% with 2.06% from dividends and 16.98% from capital gains.

This Reuters article talks about the recommended suspension of a Medtronic implant by the EU Drug Agency. This Insider Trading Report talks about recent insider trading at this company. This report says in the net insider trading over the last 6 months is a change of negative 4.11%. Recently Medtronic was allowed to transfer cash to the US by paying a 5% tax rate.

This is the second of two parts. The first part was posted on Monday, October 26, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Medtronic is the world's leading medical technology company, pioneering device-based therapies that restore health, extend life and alleviate pain. Primary products include those for bradycardia pacing, tachyarrhythmia management, atrial fibrillation management, among others. Medtronic operates its business in one reportable segment, that of manufacturing and selling device-based medical therapies. The company does business in more than 120 countries. The company's product lines include cardiac rhythm management, neurological and spinal, vascular and cardiac surgery. Its web site is here Medtronic PLC.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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