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

Zacks Equity Research

In the latest trading session, Medtronic (MDT) closed at $120.97, marking a -0.1% move from the previous day. This move lagged the S&P 500's daily gain of 0.11%. At the same time, the Dow lost 0.09%, and the tech-heavy Nasdaq gained 0.2%.

Coming into today, shares of the medical device company had gained 6.43% in the past month. In that same time, the Medical sector gained 0.94%, while the S&P 500 gained 3.25%.

MDT will be looking to display strength as it nears its next earnings release, which is expected to be February 18, 2020. On that day, MDT is projected to report earnings of $1.38 per share, which would represent year-over-year growth of 6.98%. Our most recent consensus estimate is calling for quarterly revenue of $7.82 billion, up 3.59% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.60 per share and revenue of $31.53 billion, which would represent changes of +7.28% and +3.17%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MDT. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. MDT is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MDT has a Forward P/E ratio of 21.62 right now. For comparison, its industry has an average Forward P/E of 27.39, which means MDT is trading at a discount to the group.

It is also worth noting that MDT currently has a PEG ratio of 2.94. 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. Medical - Products stocks are, on average, holding a PEG ratio of 2.71 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 93, which puts it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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