2000 2010
Share Price Summary Overview Percent Price Change MDT S&P 500
Close Price on 7/28/10......................................... $36.45 Float (mil)........................................................ 1,081.172 Year to Date...............................-17.12........... -0.80
Absolute Price Change on 7/28/10........................... -0.91 10 Day Average Volume (mil)................................... 5.680 One Year.......................................4.20.......... 13.43
Percent Change....................................................-2.51% 1 Day Volume Change on 7/28/10.........................-2.26% Two Years................................. -30.77......... -12.43
Off 52-Week High...............................................-21.88% Market Capitalization (mil)....................................$39,474 Three Years............................... -28.26......... -24.18
Over 52-Week Low................................................ 5.90% TTM Price/Earnings................................................. 13.05 Five Years..................................-32.42......... -10.38
Beta....................................................................... 0.768 Price/Earnings Current Fiscal Year Estimate.............. 10.43 Ten Years.................................. -29.90......... -22.10
Table of Contents
Reuters Rating ....................................... 2 General Sentiment ..................................5 Footprints of Success ............................. 8
Getting Acquainted ................................. 3 Stock Price Rationale ..............................6
Share Price Trends .................................4 Expectations and Credibility .....................7
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and US-listed ADRs with a market capitalization greater than $50mm based on a series of financial attributes. These ratings are not intended as an indication of how an individual's investment will
perform. As used in this report, "Outperform" designates the companies that rank in the top 30% of companies covered by Reuters, "Neutral" designates the middle 40%, and the bottom 30% are
designated "Underperform". All ratings are relative to the universe of companies covered by Reuters and not to any specific benchmark.
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Medtronic, Inc. (NYSE:MDT) -- Medical Equipment & Supplies/Healthcare Reuters Company Research
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MDT shares are presently rated NEUTRAL. Value Catch-up 24%
No forecast is made for the stock market as a whole. But Value Operational
we believe it is probable that stocks rated NEUTRAL will, Catch-up Trends
in the aggregate, perform generally in line with our
coverage universe. "Under" = Underperform Technical Factors: Neutral
This rating is based on analyses of share price
Fundamental Quality Component: Outperform movements over a variety of time periods. We
compare performance characteristics of individual
This rating is based on characteristics traditionally associated with "good" companies. We focus on how each company stocks with those of all the others we rate.
measures up against others, and give careful attention to recent improvement or slippage relative to other companies. Generally speaking, our goal is to favor up-trending
TTM = Trailing Twelve Months. shares that have experienced recent corrections
Very Negative Negative Neutral Positive Very Positive and de-emphasize down-trending shares
TTM Return on Investment experiencing uncharacteristic periods of strength.
Improvement in TTM Return on Investment Here is how MDT shares performed during the
TTM Pretax Margin various periods we examined.
Improvement in TTM Pretax Margin Price Change
Depreciation in Excess of Capital Spending Needs Past 7 days -0.9%
Issuance/Repurchase of Common Shares Past 30 days 0.7%
Common Shares Dilution Past 60 days -7.0%
Presence/Absence of Unusual Income Items
Change for Past 180 Days: -15.0%
Value Catch-up Component: Underperform
This rating measures the extent to which the share price adequately reflects improving or eroding fundamentals, and favors
shares whose prices have been slower to "catch up" to improving performance measures. TTM = Trailing Twelve Months. $42.89
Very Negative Negative Neutral Positive Very Positive $36.45
Price Catch-up with TTM Earnings Open on 2/1/10 Close on 7/28/10
Price Catch-up to TTM Sales
Price Catch-up to TTM Free Cash Flow
Price Catch-up to MRQ Book Value Change Between 60 and 30 Days Ago: -7.6%
Very Negative Negative Neutral Positive Very Positive Open on 6/1/10 Close on 6/29/10
Most Recent Quarter EPS Growth
Improvement in EPS Growth for Consecutive Quarters Change Between 180 and 60 Days Ago: -8.7%
Improvement in EPS Growth (MRQ vs. TTM)
Most Recent Quarter Sales Growth
Improvement in Sales Growth (MRQ vs. TTM)
$42.89 $39.18
Peer Comparison
Open on 2/1/10 Close on 5/28/10
This section shows the comparison of key components between MDT and several of its peers.
Composite Fundamental Technical Value Operational
Company Name (Ticker) Rating Quality Factors Catch-up Trends Change Between 180 and 90 Days Ago: 1.9%
Medtronic, Inc. (MDT) Neutral Outperform Neutral Underperform Neutral
Boston Scientific Corpo... (BSX) Underperform Neutral Neutral Outperform Underperform
St. Jude Medical, Inc. (STJ) Neutral Outperform Underperform Underperform Outperform $43.69
$42.89
Zimmer Holdings, Inc. (ZMH) Outperform Outperform Neutral Underperform Outperform
Johnson & Johnson (JNJ) Neutral Outperform Neutral Underperform Underperform
Stryker Corporation (SYK) Neutral Outperform Neutral Underperform Neutral Open on 2/1/10 Close on 4/30/10
Getting Acquainted
Start your analysis by learning what the company does, how well it does it, where it stands relative to peers, and whether aspects of the corporate structure or capitalization are
bothersome to you.
Financial Trends
TTM = Trailing Twelve Months, * = Most Recent Quarter.
Historic Growth Rates
Fiscal Year Ending 4/28/06 4/27/07 4/25/08 4/24/09 4/30/10 TTM 3 Year 5 Year 10 Year
Sales (mil) $11,292.0 $12,299.0 $13,515.0 $14,599.0 $15,817.0 $15,817.0 8.75 9.48 12.17
EPS (GAAP) $2.09 $2.41 $1.87 $1.84 $2.79 $2.79 5.02 13.58 12.17
Dividends/Share $0.39 $0.44 $0.50 $0.75 $0.82 $0.82 23.06 19.61 17.75
Book Value/Share $8.12 $9.60 $10.25 $11.78 $13.33 * $13.33 11.57 9.08 13.48
Tangible Book Value/Sh. $2.98 $4.56 $1.62 $2.24 $3.35 * $3.35 (9.76) (4.66) 2.46
Cash Flow/Share $2.54 $2.91 $2.43 $2.46 $3.49 $3.49 6.19 13.45 12.38
Free Cash Flow/Share $0.42 $1.53 $2.03 $2.11 $2.33 $2.33 15.04 7.80 19.17
Key Ratios
Historic Averages
Fiscal Year Ending 4/28/06 4/27/07 4/25/08 4/24/09 4/30/10 TTM 3 Year 5 Year 10 Year
% Sales Growth 12.3 8.9 9.9 8.0 8.3 8.3 8.8 9.5 12.2
% EPS Growth 41.6 15.3 (22.5) (1.7) 52.0 52.4 9.3 16.9 15.2
% Gross Margin 75.1 74.3 74.5 75.9 75.9 75.9 75.4 75.1 75.1
% Operating Margin 28.0 28.6 20.3 16.7 25.1 25.1 20.7 23.7 25.7
% Tax Rate 19.4 20.3 22.0 15.2 21.9 21.9 19.7 19.8 25.7
% Return on Assets 14.0 14.3 10.3 9.0 12.0 12.0 10.4 11.9 12.7
% Return on Investment 17.9 17.4 12.0 10.6 14.3 14.3 12.3 14.4 16.1
% Return on Equity 25.7 27.5 19.0 16.7 22.3 22.3 19.3 22.2 21.2
Asset Turnover 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7
Receivables Turnover 4.8 4.8 4.4 4.5 4.9 4.9 4.6 4.7 4.7
Inventory Turnover 2.6 2.6 2.8 2.6 2.6 2.6 2.7 2.6 2.5
Peer Comparison
This table gives an indication of how Medtronic, Inc. stands in key respects compared with companies in the Medical Equipment & Supplies Industry
Current Fiscal Current Fiscal P/E Based on
Last Fiscal Year Year Projected Projected Year Projected Current Year EPS % Growth EPS % Growth
Company Name (Ticker) Revenue (mil) Revenue (mil) Price/Sales Operating EPS EPS Estimates Previous 5 Years Next 5 Years
Medtronic, Inc. (MDT) $15,817.0 $16,366.2 2.4 $2.79 $3.49 10.4 13.6 10.7
Boston Scientific Corpo... (BSX) $8,188.0 $7,807.1 1.1 ($0.68) $0.32 17.5 NA 10.3
St. Jude Medical, Inc. (STJ) $4,681.3 $5,112.8 2.3 $2.26 $2.87 12.7 15.4 12.2
Zimmer Holdings, Inc. (ZMH) $4,095.4 $4,256.3 2.5 $3.32 $4.27 12.5 8.7 10.5
Johnson & Johnson (JNJ) $61,897.0 $62,562.4 2.5 $4.40 $4.72 12.3 9.9 6.8
Stryker Corporation (SYK) $6,723.1 $7,231.1 2.6 $2.77 $3.27 14.3 21.0 13.1
Synthes Inc. (SYST) NA NA NA NA NA NA NA NA
Abbott Laboratories (ABT) $30,764.7 $35,424.8 2.1 $3.69 $4.16 11.8 12.8 10.5
High: 46.66
$46.66
43.06
39.46
35.86
Low: 34.82
Volume (mil)
Average Volume
6.25
Aug' 09 Sep Oct Nov Dec Jan' 10 Feb Mar Apr May Jun Jul
$62.00 $59.00
52.00
49.00
42.00
39.00
32.00
29.00
0.11 0.14
2001 2002 2003 2004 2005 2006 2007 2008 2009 Vol (bil) 2006 2007 2008 2009 2010 Vol (bil)
$46.00
$38.00
37.30
41.00
36.60
35.90
36.00
35.20
6.31 6.22
Feb' 10 Mar Apr May Jun Jul Vol (mil) Jul Vol (mil)
General Sentiment
You can follow popular opinion or choose a contrarian's strategy. Either way, you should know whether the Street is bullish or bearish. Investor sentiment is typically positive when
the 50-day moving average is rising, especially if it's also above the 200-day moving average. Additionally, changes in price trend can be deemed more definitive if supported by
higher than normal volume.
$46.66
42.86
39.06
35.26
Volume (mil)
Average Volume
6.25
Aug' 09 Sep Oct Nov Dec Jan' 10 Feb Mar Apr May Jun Jul
Price History
Calendar Year 2001 2002 2003 2004 2005 2006 2007 2008 2009
High Price 60.81 50.69 52.92 53.70 58.91 59.87 57.99 56.97 44.94
Low Price 36.64 32.50 42.15 43.99 48.70 42.37 44.87 28.33 24.06
Year End Price 51.21 45.60 48.61 49.67 57.57 53.51 50.27 31.42 43.98
Fiscal Year Ending 4/30/04 4/29/05 4/28/06 4/27/07 4/25/08 4/24/09 4/30/10 4/30/11E 4/30/12E
Sales/Share $7.41 $8.24 $9.28 $10.59 $11.82 $12.96 $14.26 $14.75 $15.47
Price/Sales NA NA 5.40 5.06 4.18 2.28 3.06 2.47 2.36
EPS (GAAP) $1.60 $1.48 $2.09 $2.41 $1.87 $1.84 $2.79 $3.49 $3.82
P/E (GAAP) NA NA 23.96 22.22 26.44 16.09 15.64 10.43 9.54
EPS (Normalized) $1.63 $1.86 $2.46 $2.53 $2.54 $3.10 $3.14 $3.49 $3.82
P/E (Normalized) NA NA 20.40 21.18 19.43 9.55 13.91 10.43 9.54
Dividend Yield (%) NA NA 0.77 0.82 1.01 2.54 1.88 2.44 2.74
Price/EPS (Est.) for Current FY Price/EPS (Est.) for Next FY Long Term Growth Estimate Next FY P/E over LT Growth
Medtronic, Inc. 10.43 9.54 10.68 0.89
Medical Equipment & Supplies 16.66 14.78 14.24 1.05
S&P 500 14.97 12.82 11.04 1.35
Estimates In Context
Below are the present consensus revenue and EPS estimates. Notice whether analysts expect recent year-to-year growth trends to persist, or are forecasting sharp improvement or
deterioration. The sharper the predicted change, the greater the level of uncertainty in the forecast. (GAAP = Generally Accepted Accounting Principles)
Annual Growth EPS (%) Sales (%) Quarterly Growth EPS (%) Sales (%) Quarterly EPS Estimate Revisions
5 year Estimate 10.7 NA 10/10 qtr. Estimate 10.0 4.4
2011 Estimate 25.1 3.5 07/10 qtr. Estimate 3.6 0.8 07/10 qtr.
Last 5 years 13.6 9.5 04/10 qtr. 9.8 9.6
Last 3 years 5.0 8.7 01/10 qtr. 8.5 10.2 $0.52
Last Year 52.0 8.3 10/09 qtr. 14.9 7.5 0.50
Trailing 12 Months 52.4 8.3 07/09 qtr. 9.7 6.1 0.47
0.45
Analyst Recommendation Trends Oct Jan Apr Jul
Difference of opinion is normal, so don't demand unanimity. Look for ratings clusters in a part of the best-to-worst scale and 10/10 qtr.
at Mean Rating scores. Also important is whether analyst sentiment is improving or declining over time. $0.49
0.47
Buy Outperform Hold Underperform Sell Mean
0.44
(Value 1) (Value 2) (Value 3) (Value 4) (Value 5) Rating
As of 7/28/10 8 8 11 0 0 2.11 0.42
As of 4 Weeks ago 9 6 12 0 0 2.11 Oct Jan Apr Jul
As of 8 Weeks ago 10 7 11 0 0 2.04 01/11 qtr.
As of 12 Weeks ago 9 6 12 0 0 2.11
$0.52
0.50
Bar Chart Key Mean Rating 0.47
12 Wks ago R 7/28 1.00 = Best 0.45
5.00 = Worst Oct Jan Apr Jul
1.63
38.83
FY 2004 1.48
Footprints of Success
In many respects, business success requires subjective judgment. However, over time, good companies tend to leave good footprints, which become most visible when company data
is compared to industry/sector/market benchmarks. That's how you see when companies perform well, not just because a rising business tide lifts all boats, but because the company
is doing unique, good things. Look, too, at time-series comparisons, and take note of companies that are improving faster or suffering less than peers.
Capital Spending Growth for Past 5 Years 6.6 11.3 4.1 6.2 62
EPS Growth for Most Recent Quarter 839.0 13.1 (3.6) 24.0 98
EPS Growth for Trailing Twelve Months 52.4 22.5 22.7 13.3 76
EPS Growth for Past 5 Years 13.6 24.7 18.9 11.5 55
Worst R Best = Co. underperforming = Co. outperforming
Company Quality
Some companies excel in obtaining high margins (watch out for very low tax rates, which may reflect special benefits that often won't persist indefinitely) while others are highly
efficient. Still others are strong in both respects. These trade-offs are balanced in the Management Effectiveness returns, which combine both factors. TTM = Trailing Twelve Months.
Financial Strength
Quick Ratio (cash and marketable securities divided by current liabilities) and Current Ratio (all current assets divided by current liabilities) give a sense of how readily the company
could cover current obligations if the sales were to stop. Higher ratios indicate greater liquidity. Different businesses have different cash inflow-outflow characteristics, so compare
companies to industry averages. Similar comparisons are relevant for debt ratios (higher ratios indicate more debt and, hence, more financial risk) and interest coverage (lower
numbers signify greater risk).
Company Rank MDT MDT MDT
MDT Industry Sector S&P 500 in Industry vs. Industry vs. Sector vs. S&P 500
Quick Ratio 1.6 2.3 2.0 1.3 52
Current Ratio 1.9 3.3 2.7 1.8 44
Total Debt to Equity 65.1 41.1 44.0 74.6 18
Long Term Debt to Equity 47.5 36.6 36.6 67.1 19
Interest Coverage 13.7 13.4 18.0 13.2 80
Worst R Best = Co. underperforming = Co. outperforming