Medtronic (MDT) Q2 2019 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Medtronic plc (NYSE:MDT) is a large-cap stock with a market capitalization of $149.3 billion and a total enterprise value of $165.9 billion. The company operates in the Healthcare sector and Healthcare Equipment & Supplies industry.

MDT is scheduled to report Q2 earnings results on November 19, 2019. The company is expected to report earnings of $1.28/share on revenue of $7.66 billion.

The consensus earnings per share (EPS) of $1.28/share is based on a poll of 21 analysts and represents a growth of 4.9% over the same quarter last year when the company reported earnings of $1.22/share. The revenue forecast of $7.66 billion based on a poll of 19 analysts implies a year-over-year (YoY) growth of 2.4%. Last year the company reported $7.481 billion in revenue for the quarter.

Expected to report EPS growth of $0.06/share for Q2, 2019
Metric Expected Prior Year YoY Change
Revenue $7,660.00 $7,481.00 2.4%
EPS $1.28 $1.22 4.9%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance. What are your expectations from Medtronic for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2020 $1.18 $1.26 6.8% Beat
Q4, 2019 $1.47 $1.54 4.8% Beat
Q3, 2019 $1.24 $1.29 4.0% Beat
Q2, 2019 $1.15 $1.22 6.1% Beat
Q1, 2019 $1.11 $1.17 5.4% Beat
Q4, 2018 $1.38 $1.42 2.6% Beat
Q3, 2018 $1.16 $1.17 0.7% Beat
Q2, 2018 $1.02 $1.07 4.9% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Medtronic’s stock price performance? It’s more important for some companies than for others. In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 26, 2019, the stock price reacted by increasing by 3.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-20 $104.18 $107.79 3.5% Increase
2019-05-23 $88.76 $93.03 4.8% Increase
2019-02-19 $92.27 $92.80 0.6% Increase
2018-11-20 $90.37 $92.97 2.9% Increase

Fundamentals And Technical Analysis

Medtronic is currently trading at $111.25/share, down -0.7% for the day. The company is trading at approximately 99.3% of its 52-week high of $112.05/share. The company’s stock price is up 6.8% since the last earnings report and up 2.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 57.65 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 32.9x and a forward P/E multiple of 19.6x. Medtronic’s current share price also implies a price-to-book (P/B) multiple of 2.9x. The following table summarizes some other key fundamental ratios:

Data as of November 18, 2019
Metric Value
Last Fiscal Period FY2020.Q1
Period End Date July 26, 2019
Stock Price (Current) $111.25
P/E Ratio 32.9x
P/E Ratio (Fwd) 19.6x
PEG Ratio 2.7
Total Debt to Capital (%) 15.7%
Levered Free Cash Flow $5.671 billion
Enterprise Value / EBITDA 17.3x

Company Profile: Medtronic plc

Medtronic plc develops, manufactures, distributes, and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. It operates in four segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group.

The Cardiac and Vascular Group segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; AF ablation products; insertable cardiac monitor systems; mechanical circulatory support; TYRX products; and remote monitoring and patient-centered software. It also provides aortic valves; percutaneous coronary intervention stents, surgical valve replacement and repair products, endovascular stent-grafts, percutaneous angioplasty balloons, and products to treat superficial venous diseases in the lower extremities.

The Minimally Invasive Therapies Group segment offers surgical products, including surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, and gynecology products; hardware instruments and mesh fixation device; and gastrointestinal, inhalation therapy, and renal care solutions.

The Restorative Therapies Group segment offers products for spinal surgeons, neurosurgeons, neurologists, pain management specialists, anesthesiologists, orthopedic surgeons, urologists, colorectal surgeons, urogynecologists, interventional radiologists, and ear, nose, and throat specialists; and systems that incorporate energy surgical instruments. It also provides image-guided surgery and intra-operative imaging systems and robotic guidance systems used in robot-assisted spine procedures; and therapies for vasculature in and around the brain.

The Diabetes Group segment offers insulin pumps and consumables, continuous glucose monitoring systems, and therapy management software.

The company was founded in 1949 and is headquartered in Dublin, Ireland.

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