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Medtronic (MDT) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Medtronic (MDT) closed at $88.81 in the latest trading session, marking a +1.57% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.1%. Meanwhile, the Dow gained 0.15%, and the Nasdaq, a tech-heavy index, lost 0.66%.

Prior to today's trading, shares of the medical device company had lost 3.58% over the past month. This has was narrower than the Medical sector's loss of 4.88% and lagged the S&P 500's gain of 3.95% in that time.

MDT will be looking to display strength as it nears its next earnings release, which is expected to be May 23, 2019. In that report, analysts expect MDT to post earnings of $1.24 per share. This would mark a year-over-year decline of 12.68%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.12 billion, down 0.34% from the year-ago period.

Investors should also note any recent changes to analyst estimates for MDT. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.03% lower within the past month. MDT is currently sporting a Zacks Rank of #4 (Sell).

Digging into valuation, MDT currently has a Forward P/E ratio of 16.98. Its industry sports an average Forward P/E of 24.68, so we one might conclude that MDT is trading at a discount comparatively.

We can also see that MDT currently has a PEG ratio of 2.29. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Medical - Products industry currently had an average PEG ratio of 2.27 as of yesterday's close.

The Medical - Products industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 164, which puts it in the bottom 36% 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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