Tuesday, June 9, 2009

Medtronic Inc. 2

I am continuing my review of this stock (NYSE-MDT) today. I still want to reposition my holdings in my US currency account, so I am looking at other US stocks. I also want to do this while the stock market is relatively low. I can see why this stock might be a favorite, and it is on the US www.dividendachievers.com. I will not be buying this stock, and it is mainly because of the low historical dividend yield.

I have updated my spreadsheet today, as the figures for the year ending in April 2009 have been published. I had not found them before. They have not put out an annual statement, but they published 4th quarter results. I first looked at Insider Buying and Selling and find that there is more selling than buying. However, we are dealing with very small amounts that I do not see that it tells us anything.

Looking that the results, I find that if anyone has held this stock for the last 10 years, they would have lost money. However, the stock price is getting much closer to the Graham Price and the P/E at just under 11 is much lower than it has been for quite some time.

Turning to what analysts are saying about this stock, I find that there are lots of Strong Buy ratings on this stock, and a few Buys and lots Holds. The mean rating would be a Buy. (See my site for information on analyst ratings.) It is always rather interesting when this happens. Obviously, there are very conflicting views on where or not it is a good time to buy this stock, as there seems to be approximately the same number of Holds as Strong Buys.

The last thing I looked at is the charts. You will have to go out 10 years to have a chart where this stock has done better than the S&P500. What strikes me is that this stock has had its up and downs over the past 10 years, but it has essentially gone sideways. This is also true of the US Market, whether you look at the DJIA or the S&P. You would think that the P/E and yields would be much better than what they are. You would also think that stocks would be much closer, or below the Graham Price. Over the last 10 years, you can see the improvement in the P/E, dividend yield and difference between stock price and the Graham Price. However, this stock is not cheap.

When you look at the P/E, it has gone from a peak in 1999 of 94 to 11, but I do not think that a P/E at 11 is cheap. The same is true with the dividend yield. It went from .35% to 2.2%. However, I do not think the dividend yield is particularly high. I would expect at this point in economic cycle, that US stock would relatively cheap. This one is not.

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 www.medtronic.com. See my spreadsheet at www.spbrunner.com/stocks/mdt.htm.

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. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.

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