Medtronic PLC

Sound bite for Twitter and StockTwits is: Dividend Growth Health Care. By most tests the stock price seems to be relatively reasonable and below the median. I did not like that they seem to make it difficult for me to find basic information. 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.

First this company is making it very difficult to find things. I had to google to find the Board of Directors on their site. Then I had difficulty find the latest annual report. What I was looking for was the statements of course. They have an annual type report but not statements that I could find.

I looked at Morningstar but I could not figure of the format of the report. It came up on a web page but was so hard to manage. So I googled for their annual report and found it. I am not sure what site I got. It might have been part of the Medtronic site. I do not know. This was all so frustrating. The thing is that more information is not necessarily better information. People do not always understand that. Sometimes more information just gives you more crap you have to go thought to find the information you want.

Current dividends are moderate as is the dividend growth. The current dividend yield is 2.35% with a 5 and 10 year median dividend yield of 2.06% and 2.08%. The dividend growth over the past 5 and 10 years is at 12.1% and 14.6% per year.

The dividends used to be lower with higher dividend growth until around 2009. The historical median dividend yield is just 0.73%. This historical dividend growth is 17.4% per year. The historical median dividend yield to 2009 is 0.66% and the historical dividend growth to 2009 is 20.3% per year.

They can afford their dividends. The Dividend Payout Ratio for EPS for 2017 is 59.5% with 5 year coverage at 46.7%. The DPR for CFPS is 34.9% and with 5 year coverage of 31.5%.

Currently Canadian investors would be making money on this stock. For the 5 years ending in April 2017 the total return would have been 25.19% per year. From 2014 to 2016 the 5 year total returns would have been 13.18%, 17.37% and 22.49% per year.

However from 2005 to 2012 inclusive Canadian investors would have lost money for each 5 year period prior. For example, for the 5 year period ending in 2012 the total return would have been a loss of 6.73% per year. For the 5 year period ending in 2012 the total return would have been 0.6% per year.

In US$ terms the total return for the past 5 and 10 years ending in the financial period of April 2017 is at 19.31% and 6.18% per year.

The debt ratios are good. The Liquidity Ratio for the financial year ending in April 2017 is 1.75 with a 5 year median of 3.36. The Debt Ratio for 2017 is 2.02 with a 5 year ratio of 2.05. The Leverage and Debt/Equity Ratios for 2017 is 1.98 and 0.98, respectively.

For the last 3 years the Return on Equity was been below 10%. The ROE for 2017 was 8% with a 5 year median of 8%. There is a problem with falling equity (or book value) for the past 2 years. Also, the quality of the earnings may not be there because the ROE on Comprehensive Income for 2017 is 6.5% with a 5 year median of 6.5%. Basically you want the ROE on Comprehensive Income to be the same as for Net Income and this confirms the quality of the earnings. If it is lower it suggests possible lower quality of earnings. (Or in other words the earnings may not be what they seem.)

The outstanding shares have increased by 5.7% and 1.8% per year over the past 5 and 10 years. This means that to see the actual growth you have to look at per share values especially over the past 5 years. This can sometimes matter a lot. For example in this case the 5 and 10 year growth in Revenue per Share is at 6.8% and 7.3% per year. The Revenue has grown at 12.95 and 9.2% per year. The real growth is the per share growth.

The 5 year low, median and high median Price/Earnings per Share Ratios are 24.39, 28.63 and 30.77. The 10 year values are 14.04, 19.50 and 24.95. The historical ratios are 20.98, 26.28 and 31.28. It would seem that the recent move up in P/E Ratios has more to do with Price than Earnings. The current P/E Ratio is 21.16 based on a stock price of $79.25 and 2018 EPS estimate of $3.28. This stock price testing suggests that the stock price is relatively reasonable and probably around the median.

I get a Graham Price of $52.26. The 10 year low, median and high median Price/Graham Price Ratios are 1.19, 1.51 and 1.73. The current P/GP Ratio is 1.52 based on a stock price of $79.25. This stock price testing suggests that the stock price is relatively reasonable and around the median.

The 10 year median Price/Book Value per Share Ratio is 2.37. The current P/B Ratio is 2.14 based on a stock price of $79.25, Book Value of $50672M and BVPS of $37.01. The BVPS has been declining slightly for the past two years, but the 5 and 10 year growth is at 17.4% and 14.4% per year. The current P/B Ratio is some 9.5% lower than the 10 year value. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The historical median dividend yield is 0.73%. The current dividend yield is 2.32% based on dividends of $1.84 and stock price of $79.25. The current dividend yield is some 218% higher than the historical one. This stock price testing suggests that the stock price is relatively cheap. The 5 year median dividend yield is much higher at 2.06%. The current dividend yield is some 13% higher than the 5 year median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year Price/Sales (Revenue) Ratio is 3.15. The current P/S Ratio is 3.71 a value some 18% higher. The current P/S Ratio is based on Revenue estimate for 2018 of $29,262M, Revenue per Share of $21.37 and a stock price of $79.25. This stock price testing suggests that the stock is relatively reasonable but above the median.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $89.97. This implies a total return of 15.855 with 13.53% from capital gains and 2.32% from dividends based on a current stock price of $79.25.

Hot Earnings on Post Analyst says that the consensus calls are at 2.3 which is a buy recommendations from 18 analysts with 6 Buys and 12 Holds and 0 Sells. David Galor at Oracle Examiner gives some technical analysis on this stock. Vick Brown on Economics and Money says that the Relative Strength Index shows that the stock is neither overbought nor oversold. See what analysts are saying about this company on Stock Chase. The reviews for this stock are mixed.

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.

The last stock I wrote about was about was Canadian Pacific Railway (TSX-CP, NYSE-CP)... learn more. The next stock I will write about will be Equitable Group Inc. (TSX-EQB, OTC-EQGPF)... learn more on Friday, October 27, 2017 around 5 pm. Tomorrow on my other blog I will write about Money Show 2017 - Ryan Irvine 4.... learn more on Thursday, October 26, 2017 around 5 pm.

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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