Monday, March 7, 2011

Medtronic Inc

This is the token US health care stock (NYSE-MDT) that I follow. What I am trying to see is, would have I made any money investing in this US Stock in the past? For the few US stocks that I do follow, it does not appear I would have made any money, including making money on this one.

Looking at dividend increases, for US investors the 5 and 10 year growth in dividends is at the rate of 19.3% and 18% per year, respectively. For a Canadian investor, we would not have done that badly in dividend growth as the 5 and 10 year growth in dividend was 14% per year and 13% per year, respectively.

Where this stock fails for Canadians is that we would not have made any money on it over the past 5 or 10 years. Total returns would be a negative 7% per year and a negative 5% per year, respectively. The last 5 year period that a Canadian would have made any money on this stock was 2004, where the total return was 5.7% per year. For all 5 year periods since 2004, Canadians would have not made any positive returns.

Americans investing in this stock over the past 5 and 10 years would not have made any money either, but they would have lost less. The 5 and 10 year total return in US$ would be negative 2.5% and a negative 1% per year, respectively.

However, the company itself has not done badly. Revenue has increased over the past 5 and 10 years at the rate of 12% and 13% per share per year, respectively. Cash Flow has increased over the past 5 and 10 years at the rate of 8.6% and 11.5% per year, respectively. Also, Book Value has increased over the past 5 and 10 years at the rate of 9% and 13.5% per year, respectively.

The debt ratios are fine on this stock. The Liquidity Ratio is currently at 1.51 and has a 5 year average of 2.39. The Asset/Liability Ratio is 2.01 with a 5 year average of 2.12. The Leverage Ratio is currently at 1.99 with a 10 year average of 1.72. The Debt/Equity Ratio is currently at 0.99 with a 10 year average of .072.

The last thing to talk about is the Return on Equity. The ROE for the last 12 months is good at 21.3%. The 5 year average is also good at 24.4%.

Tomorrow, I will look at what the analysts say and what my spreadsheet says on this stock.

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. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

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