Monday, August 13, 2012

Medtronic Inc 2

On my other blog are some comments on "Picking a Dividend Payer in Sideways Market". See comments blog.

I do not own this stock of Medtronic (NYSE-MDT). This is one of a few US stocks that I track. I track it because it is in the Health sector. Except for whether or not as I Canadian I would have made any money on this stock, my spreadsheet is in US$ only.

Now that this stock has been beaten down so much as far as stock prices go, it should be able to provide some return to investors going forward. Analysts are saying that they think EPS will to up both in this year and the next 2 years. It would seem to me that we might be heading for another recession, so this optimism might be misplaced.

I must admit that I do not find the US information on insider trading as helpful as the Canadian information I can get. However, as far as I can see, over the past year, there was some $2.3M US$ of insider selling and some $0.8M US$ of insider buying. There are some 1215 institutions that hold 78% of the outstanding shares in this company. Over the past 3 months they have reduced their exposure by 1%. This is a small amount, so it does not tell us much.

I get 5 year low, median and high Price/Earnings Ratios of 11.89, 19.73 and 27.56. The current P/E ratio is just 10.91 on at $39.81 stock price, so this shows a very good stock price. I get a Graham price of $36.81. The 10 year low, median and high Price/Graham price Ratios were 2.04, 2.46 and 2.83. The current P/GP Ratio is 1.08 on a stock price of $39.81. This also shows a very good relative stock price. This stock price is also getting towards the Graham Price. A stock price at the Graham Price shows good value.

I get a 10 year Price/Book Value Ratio of 2.16. The current P/B Ratio is just 2.41. The current Ratio is some 53% lower than the 5 year P/B Ratios and therefore shows a very good relative price.

The current dividend yield is 2.61% and the 5 year median dividend yield is 2.11%. The current one is some 24% higher than the 5 year median and this also shows a current good stock price.

When I look at analyst' Recommendations, I find Strong Buy, Buy, Hold and one Sell recommendation. The consensus recommendation would be a Buy. The 12 month stock price target is $42.90. This would imply a total return over the next 12 months of 10.4%.

One analysts with a Hold recommendation said that the company has competitive advantages and financial strength. They said that they expect the 12 months stock price to be at $41.00 and this implies a total return over the next 12 months of 5.6%.

An analyst with a Sell recommendation gave much lower EPS estimates for financial years ending in April 2013 and April 2014. He expects this stock to underperform the market due to market share losses and competitive risks. He said that they only reason the company did well in the fourth quarter were lower taxes.

One Buy recommendation came with a comment on the past great history of dividend increases. Over the past 3 years dividend increases have been in the 7 to 9% range, not like the previous growth of 17% over the past 10 years. The most recent increase was at 7.2%. Also, dividends are currently way higher than they have ever been considering that the 10 year median dividend yield is just 0.94%. (Current dividend yield is 2.61%.)

There is a Wikipedia entry for this company, see Medtronic. Eric Cota looks at this company's free cash flow on his blog. This company is also discussed at istockanalyst.

This stock has hit a really low P/E level for this company, but that does not mean it cannot go lower. Management seems to have some faith in the future as they just raised the dividend by 7.2%. However, the dividend increases have been dropping for a while. They have been growing the company as the stock price has been retreating. Price is quite good.

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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