Medtronic PLC

Sound bite for Twitter and StockTwits is: Price is cheap to reasonable. You may want to look at this stock if you want a US stock in the health care sector. 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.

This is a dividend growth company with moderate dividends and moderate dividend growth. The current dividend is 2.05% and the 5 year median dividend is 2.11%. The dividend growth for the past 5 and 10 years is at 11.1% and 14.6% per year.

However the historical median dividend is quite low at 0.72%. Until 2008 the dividends on this stock was below 1%. At that time also the dividend growth was higher. From 1991 to 2008 the median dividend growth was just over 17% with the 10 year median growth around 16%. The dividend high is close to 3% and this was reached around 2009/2010.

I have records on this stock back to 1991 and they have raised their dividends every year since then. So if I was looking for a dividend growth US stock, especially one in health care, I would consider this stock.

The Dividend Payout Ratio for EPS for the financial year ending in April 2016 is 61%. This is a little high, but it is also high for this Medtronic. The 5 year median DPR for EPS is 37%. This is a good payout. The DPR for CFPS is 33.7% and its 5 year median is 23.6%.

The outstanding shares have been increasing by 5.5% and 1.9% per year over the past 5 and 10 years. When you look for the company's growth it is best to look at per share growth. For example, Revenue has grown at 12.6% and 9.8% per year over the past 5 and 10 years. Revenue per Share has grown at 6.7% and 7.7% per year over the past 5 and 10 years.

This company has very good debt ratios. The Liquidity Ratio for the financial year ending in April 2016 is 3.29, with a 5 year median at 3.36. The Debt Ratio for the financial year ending in April 2016 is 2.09 with a 5 year median at 2.07. The Leverage (A/BK) and Debt/Equity Ratios for the financial year ending in April 2016 is 1.92 and 0.92 respectively with 5 year median values at 1.92 and 0.92 respectively.

Canadian investors are not only affected by how well a US stock does but also by the Canadian/US currency exchange rate. Over the past 3 years, the 5 year total return on this stock for Canadians is positive at 13.18%, 17.37% and 23.48% respectively in total returns per year. However, prior to the financial year of April 2014, Canadian investors would have had a negative 5 year return over a 9 year period.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.45, 18.04 and 20.63. The corresponding 5 year values are 14.04, 19.10 and 21.58. The corresponding historical values are much higher at 20.06, 25.98 and 31.72. The higher P/E Ratios correspond with the lower dividend yields prior to 2009. The current P/E Ratio is 24.90 based on a stock price of $83.91 and 2017 EPS estimate of $3.37. Based on the last 10 years of data, this stock price testing suggests that the stock price is relatively expensive. If you look at historical data, the stock price is relatively reasonable and below the median.

I get a Graham Price of $52.52. 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 1.60 based on a stock price of $83.91. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 2.62. The current P/B Ratio is 2.31 based on BVPS of $36.38 and a stock price of $83.91. The current P/B Ratio is some 12% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical dividend yield of 0.72%. The current dividend yield is 2.05% based on dividends of $1.72 and a stock price of $83.91. The current dividend is some 185% higher than the historical median dividend yield. This stock price testing suggests that the stock price relatively cheap.

If you look at the median dividend yield for the last 5 and 10 years they are at 2.11% and 2.08%. In comparison with the yields for the last 5 and 10 years, the stock price is relatively reasonable and around 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 target is $94.63. This implies a total return of 14.83% with 12.78% from capital gains and 2.05% from dividends.

Jessica Moore at Cerbat Gem talks about buys and sells by institutions in this stock. For example, Boston Private Wealth LLC decreased its position in Medtronic PLC by 3.4% during the second quarter. Al Bentley at Simply Wall Street looks at the intrinsic value of this stock and finds it 9% undervalued. Sara Cox at Review Fortune looks at how analysts are rating this stock. She looked at 26 analysts who collectively have a Hold rating on this stock.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

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 Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF)... learn more on Wednesday, October 26, 2016 around 5 pm. Tomorrow on my other blog I will write about Money Show 2016 - Stefanie Kammerman... learn more and I will write about Money Show 2016 - Scott Hanson... learn more on Tuesday, October 25, 2016 around 5 pm.

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.

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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.