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Medtronic (MDT) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Medtronic (MDT) closed at $102.40, marking a +1.41% move from the previous day. The stock lagged the S&P 500's daily gain of 1.5%. At the same time, the Dow added 1.48%, and the tech-heavy Nasdaq gained 1.95%.

Coming into today, shares of the medical device company had gained 1.33% in the past month. In that same time, the Medical sector lost 1.46%, while the S&P 500 lost 4.19%.

Wall Street will be looking for positivity from MDT as it approaches its next earnings report date. This is expected to be August 20, 2019. The company is expected to report EPS of $1.18, up 0.85% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $7.41 billion, up 0.36% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.47 per share and revenue of $31.44 billion, which would represent changes of +4.79% and +2.88%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for MDT. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.01% higher within the past month. MDT is currently a Zacks Rank #2 (Buy).

In terms of valuation, MDT is currently trading at a Forward P/E ratio of 18.49. For comparison, its industry has an average Forward P/E of 28.22, which means MDT is trading at a discount to the group.

Meanwhile, MDT's PEG ratio is currently 2.59. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Medical - Products stocks are, on average, holding a PEG ratio of 2.57 based on yesterday's closing prices.

The Medical - Products industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 63, which puts it in the top 25% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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