Medtronic Inc

On my other blog I am today writing about my spammers...continue...

I do not own this stock 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 an example of a fast growing company that has become a mature company. In its fast growing stage between approximately 1998 until 1992, the median P/E Ratio was 56.00. Since then the P/E Ratio has steadily been declining to a current 5 year median of 12.77 and the stock price has not really changed much. It could be worse as sometimes the price declines with the declining P/E Ratio.

On my spreadsheet, almost every growth measure shows good growth except for the growth in total return. The current 5 year low, median and high median P/E Ratios of 10.91, 12.77 and 14.64 are in line with those expected of a mature company, so there is hope that investors in the future will have better returns.

If you look at 5 year running growth over the past 5 and 10 years, you get growth of 9% and 12% per year for Revenue per Share, growth of 5.6% and 11% per year for EPS and growth of 7.7% and 11.7% per year for Cash Flow per Share. This is a very good showing.

The 5 year median dividend yield is 2.46%. The growth in dividends over the past 5 and 10 years is at 15.7% and 15.3% per year. The 5 year median Dividend Payout Ratios for earnings is at 31.5% and for cash flow is 23%. This is also a good showing.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The majority of the recommendations are a Hold, but there are lots of Strong Buy recommendations too. The consensus would be a Buy. (See my blog for information on analyst ratings.) The 12 month stock price consensus is $58.30. This implies a total return of 12.02% with 2.11% from dividends and 9.91% from capital gains.

The blogger Insider Monkey says that Hedge funds are keen on this company. You can see more details here. The blogger I Stock Analyst finds the current price good in July 2013 at around $53.52. (The current price is around $53.04.)

For my stock price tests, I find that the P/E Ratio, which is currently at 14.38, shows a still reasonable price, but towards to high end as 5 year low, median and high median P/E Ratios are 10.91, 12.77 and 14.64. The Graham Price is $38.90 and the current P/GP Ratio is 1.36. The 10 year low, median and high median P/GP Ratios are 1.95, 2.28 and 2.58. This test says the stock price is relatively low.

The 10 year P/B Ratio is 4.05. The current one is only 30% of this value at 2.91. On a relatively basis the stock price is low. However, 2.91 is not a particularly low P/B Ratio. (A low P/B Ratio is 1.50.) The 5 year dividend yield is 2.46% and the current dividend yield at 2.11% is 15% lower. To get a good price, you would want the current dividend yield to be higher than the 5 year median dividend yield, but 15% difference is not that far off.

The stock price is probably relatively reasonable on a company with good growth. See my spreadsheet at mdt.htm.

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.

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 or StockTwits.