Key takeaways
View moreMedtronic appears moderately undervalued based on its significantly lower EV/EBITDA multiple compared to industry averages, strong free cash flow generation, and robust market positions in key growth segments. While increasing debt levels and the pending Diabetes spin-off present risks, these appear more than offset by the company's strong operational performance, innovation pipeline, and growth opportunities in areas like Cardiac Ablation Solutions and Renal Denervation.
- Medtronic's planned spin-off of its Diabetes business is a strategic move expected to improve margins and focus on higher-growth areas, but it introduces uncertainty and execution risk.
- The company's increasing debt levels raise solvency concerns, requiring careful monitoring of financial leverage and interest coverage ratios. The total debt to total equity ratio increased from 58.12% to 61.69%.
- Medtronic's strong cash flow generation provides financial flexibility for investments and shareholder returns, but efficient capital allocation is crucial. Net operating cash flow increased significantly from $986 million in 2024-07-31 to $2,528 million in 2025-04-30.
- The company faces intense competition, pricing pressure, and a complex regulatory environment, which pose significant operational and financial risks.
- Medtronic's valuation appears high relative to its growth, with Enterprise Value to EBITDA ranging from 14.20 to 16.03, while the industry average is 37.82.
- The company's ability to manage costs, navigate competition, and adapt to regulatory changes will be critical for sustaining long-term financial health.
- Medtronic has outperformed Edwards Lifesciences Corp. (EW) over the past year, with a 1-year return of 15.24% compared to EW's -13.34%.
- Management expects approximately 5% organic revenue growth in fiscal year 2026, as stated in the earnings call summary.
- The company is increasing its investment in R&D to support future growth, especially in areas like Cardiac Ablation, Surgical Robotics, and Renal Denervation, according to the earnings call insights.
Evaluation summary
Add to research
-
Company Overview:
- Medtronic Plc (MDT) is a global medical technology company that develops, manufactures, and sells device-based medical therapies and services. Its operations are divided into four segments: Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and Diabetes Operating Unit.
- Key products include pacemakers, defibrillators, cardiac resynchronization therapy devices, transcatheter aortic valve replacement (TAVR) systems, spinal implants, neurostimulation devices, insulin pumps, and continuous glucose monitoring systems. The Cardiovascular Portfolio includes products for cardiac rhythm disorders and cardiovascular disease. The Neuroscience Portfolio includes cranial and spinal technologies, specialty therapies, and neuromodulation divisions. The Medical Surgical Portfolio includes surgical innovations and respiratory, gastrointestinal, and renal divisions. The Diabetes Group offers insulin pumps, continuous glucose monitoring systems, and insulin pump consumables.
- MDT's peers for comparative analysis include Edwards Lifesciences Corp. (EW) and Abbott Laboratories (ABT). The benchmark used is the Health Care Select Sector SPDR Fund (XLV).
-
Financial Performance:
- Medtronic has shown consistent revenue growth, with sales/revenue increasing from $7,915 million in 2024-07-31 to $8,927 million in 2025-04-30.
- Gross profit margin has fluctuated, ranging from 58.49% in 2025-04-30 to 61.31% in 2025-01-31. The industry average gross profit margin is 18.19%, significantly lower than Medtronic's.
- Net profit margin has also varied, from 11.84% in 2025-04-30 to 15.61% in 2025-01-31. The industry average net profit margin is -763.19%, indicating Medtronic's superior profitability compared to its peers.
- Return on Average Assets (ROA) ranged from 4.35% to 5.13%, while the industry average is -38.29%. Return on Average Total Equity (ROE) ranged from 7.92% to 9.49%, compared to an industry average of -144.07%. Return on Average Total Capital ranged from 7.67% to 8.07%, while the industry average is -47.65%. These figures demonstrate Medtronic's strong profitability relative to the industry.
- EBITDA margin ranged from 25.58% to 29.03%, while the industry average is -862.45%.
- According to the SEC filings summary, profitability has been impacted by inflationary cost pressures, tariffs, and increased R&D and commercialization expenses.
-
Operational Efficiency:
- Total current assets increased from $21,947 million in 2024-07-31 to $23,814 million in 2025-04-30, indicating improved liquidity.
- Working capital has remained relatively stable, ranging from $10,243 million to $11,660 million.
- Net operating cash flow increased significantly from $986 million in 2024-07-31 to $2,528 million in 2025-04-30.
- Free cash flow to equity also increased, from $466 million to $2,069 million during the same period, demonstrating improved cash generation.
- Total capital expenditure has been consistent, ranging from $404 million to $520 million. Depreciation, depletion, and amortization ranged from $662 million to $840 million.
- Cash dividends paid remained stable at approximately $897 million to $898 million per quarter.
- The current ratio ranged from 1.84 to 2.13, below the industry average of 4.31, suggesting potentially lower short-term liquidity compared to peers. The quick ratio ranged from 1.39 to 1.61, also below the industry average of 3.66.
- The total debt to total equity ratio increased from 58.12% to 61.69%, indicating increasing financial leverage. Debt / EBITDA ranged from 3.00 to 3.31.
-
Growth Opportunities:
- Medtronic is focused on market expansion, particularly in Cardiac Ablation Solutions (CAS), Structural Heart, and Neuromodulation, as highlighted in the earnings call.
- The company is increasing its investment in R&D to support future growth, especially in areas like Cardiac Ablation, Surgical Robotics, and Renal Denervation, according to the earnings call insights.
- Geographic expansion plans include strong growth in emerging markets and continued growth in the US and Western Europe, as mentioned in the earnings call summary.
- The strategic focus areas include the Diabetes business separation, active portfolio management, and innovation in spine with the AiBLE ecosystem, as detailed in the earnings call summary.
- The company is awaiting reimbursement coverage from CMS for the Simplicity blood pressure procedure (Renal Denervation), expecting revenue to ramp up significantly once coverage is secured, as noted in the earnings call management focus.
- According to the SEC filings summary, Medtronic is actively investing in R&D and new product development to drive future growth, while also optimizing its portfolio through strategic divestitures and acquisitions.
-
Recent Developments and Market Sentiment:
- The most significant recent development is the announced plan to separate the Diabetes business into a standalone public company, as highlighted in the SEC filings summary and earnings call. This is expected to improve Medtronic's gross and operating margins and be accretive to EPS.
- The market sentiment appears cautiously optimistic, with analysts focusing on the potential benefits of the Diabetes spin-off and the company's ability to manage external factors like tariffs and foreign exchange rates, as indicated by the analysts' focus in the earnings call.
- Recent news and events, as reflected in the earnings call, include strong performance in Cardiovascular, Neuromodulation, and Diabetes, driven by innovative products and strong market positions.
- These developments align with the company's strategic objectives of focusing on high-growth markets and improving its financial profile, as stated in the earnings call summary.
-
Risks and Threats:
- Key risks identified in the SEC filings summary include competition from new technologies and products, pricing pressure from healthcare systems and payors, and regulatory risks related to product approvals and compliance.
- Industry risks include rapid technological advances, regulatory changes, and pricing pressures, as noted in the SEC filings summary.
- Competitive threats include large manufacturers and smaller specialized competitors, as well as pricing pressure and cost containment initiatives, as mentioned in the SEC filings summary.
- Regulatory risks include ongoing patent litigation, product liability lawsuits, and unresolved tax disputes, as detailed in the SEC filings summary.
- The SEC filings summary also highlights supply chain disruptions, manufacturing challenges, reliance on sole-source suppliers, intellectual property litigation, cybersecurity incidents, and global economic and political uncertainties as potential risks.
-
Valuation Analysis:
- Enterprise Value to EBITDA ranged from 14.20 to 16.03, while the industry average is 37.82, suggesting that Medtronic may be undervalued compared to its peers based on this metric.
- Enterprise Value to Sales ranged from 3.75 to 4.16, while the industry average is 14.36, also indicating potential undervaluation.
- Potential catalysts include the successful separation of the Diabetes business, positive clinical trial results for new products, and favorable regulatory decisions, as inferred from the earnings call and SEC filings.
-
Price Performance:
- The stock price has shown an upward trend from approximately $84.06 on 2025-04-30 to $86.02 on 2025-06-27.
- Medtronic Plc (MDT) has shown mixed performance compared to Edwards Lifesciences Corp. (EW). Over the past year, MDT has outperformed EW significantly, with a 1-year return of 15.24% compared to EW's -13.34%. However, in shorter periods like 3 months, MDT has underperformed EW, with returns of -3.48% and 7.91% respectively.
- Compared to the Health Care Select Sector SPDR Fund (XLV), MDT has outperformed over the past year and year-to-date, but underperformed over a 3-year period, as indicated in the benchmark evaluation.
-
Future Outlook:
- Management expects approximately 5% organic revenue growth in fiscal year 2026, as stated in the earnings call summary.
- The company anticipates a net tariff impact to COGS of approximately $200 million to $350 million, as mentioned in the earnings call summary.
- Excluding tariffs, they expect approximately 4% EPS growth in fiscal year 2026 and a return to high single-digit EPS growth in fiscal year 2027 upon the Diabetes separation, as noted in the earnings call summary.
- Recent news and developments, such as the Diabetes spin-off and continued innovation in key areas, are expected to influence the company's future performance positively, as inferred from the earnings call and SEC filings.
-
Summary:
- Medtronic is a leading medical technology company with consistent revenue growth and strong profitability compared to industry peers. However, increasing debt levels and the planned Diabetes business separation introduce uncertainty.
- Strengths: Strong market position, diversified portfolio, consistent revenue growth, strong cash flow generation.
- Weaknesses: Increasing debt levels, declining net profit margin, below-industry-average current ratio.
- Opportunities: Market expansion in key areas like Cardiac Ablation and Neuromodulation, innovation in spine with the AiBLE ecosystem, potential for improved margins after the Diabetes spin-off.
- Threats: Competition, regulatory pressures, macroeconomic factors like tariffs, ongoing litigation.
- Overall financial health is stable, but the increasing debt and potential impact of the Diabetes spin-off require close monitoring.
- Critical factors for future performance include successful execution of the Diabetes spin-off, effective cost management, and continued innovation in key growth areas.
- Areas requiring further monitoring include debt levels, net profit margin, and the impact of tariffs on profitability.
- The investment profile suggests a company undergoing significant strategic changes with a mix of growth potential and risks. The valuation appears high relative to its growth, and the market sentiment seems cautiously optimistic. The Diabetes spin-off and other strategic initiatives will be key determinants of future performance.
Price history
Add to research
Fundamentals
Add to research
Insights
- Medtronic demonstrates consistent revenue growth and strong profitability compared to industry peers, but faces decelerating growth and decreasing profit margins.
- The company's increasing debt levels raise solvency concerns, requiring careful monitoring of financial leverage.
- The planned separation of the Diabetes business introduces uncertainty and could significantly impact future financial performance.
- Medtronic's strong cash flow generation provides financial flexibility for investments and shareholder returns, but efficient capital allocation is crucial.
- The company's ability to manage costs, navigate competition, and adapt to regulatory changes will be critical for sustaining long-term financial health.
Analysis
- Revenue
- Medtronic has demonstrated consistent revenue growth, as indicated by the increasing sales/revenue trend.
- However, the 3-year CAGR is lower than the 5-year CAGR, suggesting that revenue growth is decelerating.
- The company's focus on new product launches and market expansion has likely contributed to the revenue growth.
- Profitability
- Medtronic is highly profitable compared to its industry peers, as indicated by the significantly higher net profit margin.
- However, the net profit margin is trending downward, suggesting decreasing profitability.
- Unusual expenses have had a significant impact on the company's earnings, but these are unlikely to recur.
- Liquidity
- Medtronic has a healthy liquidity position, as indicated by the increasing cash balance and stable inventories.
- However, the current ratio is below the industry average, suggesting that Medtronic may have lower short-term liquidity compared to its peers.
- The increasing short-term debt needs monitoring.
- Solvency
- Medtronic's solvency is a concern, as indicated by the increasing long-term debt.
- The total debt to total equity ratio is trending upward, suggesting an increase in financial leverage.
- However, the company's strong asset base provides some cushion.
- Operational Efficiency
- Medtronic has demonstrated efficient asset utilization, as indicated by the stable inventories and rising receivables.
- The company has been able to manage its operating expenses effectively, as indicated by the relatively stable selling, general, and administrative expenses.
- Cash Flow Analysis - Medtronic has a strong cash flow position, as indicated by the increasing operating cash flow. - The company's ability to generate free cash flow provides financial flexibility for future investments and debt repayment. - The free cash flow margin has been consistently positive, indicating efficient cash generation.
- Risk Factors
- The increasing short-term and long-term debt levels warrant close attention.
- The plan to separate the Diabetes business could impact future revenue growth and profitability.
- Medtronic faces intense competition, pricing pressure, and a complex regulatory environment, which pose significant operational and financial risks.
- Future Outlook
- Medtronic's future performance will depend on its ability to continue growing its revenue, managing its costs, and navigating the evolving industry landscape.
- The separation of the Diabetes business could have a significant impact on future earnings.
- Key metrics to monitor include revenue growth, gross profit margin, operating margin, net profit margin, current ratio, debt-to-equity ratio, and asset turnover.
- Profitability
Financial statements
Add to research
Loading...
Public filings
Add to research
- Medtronic is the leading global medical technology company, with a diverse portfolio of innovative devices, therapies, and services across several high-growth healthcare segments.
- The company faces intense competition, pricing pressure, and a complex regulatory environment, which pose significant operational and financial risks.
- Medtronic is navigating supply chain challenges, geopolitical tensions, and inflationary pressures that are impacting its profitability.
- The company is actively investing in R&D and new product development to drive future growth, while also optimizing its portfolio through strategic divestitures and acquisitions.
- Unresolved tax disputes and product liability lawsuits represent material legal risks that could adversely impact the company's financial performance and cash flows.
- Medtronic's strong liquidity position and focus on cost management initiatives provide some financial flexibility, but its long-term success will depend on its ability to navigate the evolving industry landscape and mitigate the various risks it faces.
Core Business and Operations:
- Medtronic is the leading global healthcare technology company, providing innovative medical devices, therapies, and services related to cardiac rhythm disorders, cardiovascular disease, neurological disorders, spinal conditions, diabetes, and other medical conditions
- Key product lines include pacemakers, defibrillators, cardiac resynchronization therapy devices, transcatheter aortic valve replacement (TAVR) systems, spinal implants, neurostimulation devices, insulin pumps, and continuous glucose monitoring systems
- Sells products through direct sales representatives and independent distributors, with the U.S., Western Europe, China, and Japan as the company's largest markets
- Faces competition from large manufacturers as well as smaller specialized competitors, and is subject to pricing pressure and cost containment initiatives from healthcare systems and payors
Industry and Market Trends:
- Medical device industry is highly competitive and subject to rapid technological advances, regulatory changes, and pricing pressures
- Increasing focus on value-based care, cost containment, and minimally invasive procedures is driving demand for innovative, cost-effective medical technologies
- Regulatory environment is complex and evolving, with heightened scrutiny on product quality, safety, and efficacy
- Geopolitical tensions, trade policies, and supply chain disruptions pose risks and challenges
Recent Events:
- Announced intention to separate the Diabetes business into a new independent, publicly traded company within 18 months
- Issued €3 billion in new Euro-denominated senior notes in June 2024 to fund operations and refinance debt
- Continued to invest in R&D and new product development across its key business segments
Risk Factors:
- Competition from new technologies and products, as well as pricing pressure from healthcare systems and payors
- Regulatory risks related to product approvals, quality issues, and compliance with evolving laws and standards
- Supply chain disruptions, manufacturing challenges, and reliance on sole-source suppliers
- Intellectual property litigation and disputes
- Cybersecurity and data privacy incidents
- Global economic, political, and trade policy uncertainties
- Tax and legal/regulatory changes that could impact the company's operations and financial results
Legal Matters:
- Ongoing patent litigation with Colibri Heart Valve over the company's TAVR devices
- Numerous product liability lawsuits related to hernia mesh and diabetes pump products
- Antitrust litigation with Applied Medical over alleged anticompetitive conduct
- Unresolved tax disputes with the IRS over the allocation of income between Medtronic and its Puerto Rico subsidiary
Management's Discussion and Analysis:
- Revenue growth driven by strong performance in Cardiac Ablation Solutions, Cardiac Pacing Therapies, TAVR, Diabetes, and Neuromodulation
- Profitability impacted by inflationary cost pressures, tariffs, and increased R&D and commercialization expenses
- Healthy liquidity position with $6.7 billion in current investments and $3.5 billion credit facility
- Continued focus on cost management initiatives and portfolio optimization through divestitures and acquisitions
- Effective tax rate fluctuates due to changes in tax laws, valuation allowances, and unresolved tax disputes
Earnings calls
Add to research
Earnings Report 2025Q4 (2025-05-21)
Key takeaways
- Diabetes Spin-Off is a Key Catalyst: The separation of the Diabetes business is a strategic move expected to unlock value by allowing Medtronic to focus on higher-margin growth areas and improving the company's overall financial profile.
- Growth Drivers are Durable: Medtronic's growth is supported by a diversified portfolio of innovative products and strong market positions, particularly in Cardiovascular, Neuromodulation, and Spine, suggesting sustainable growth potential.
- Cost Management is a Priority: Management is actively focused on cost management and operational efficiency, with initiatives in place to mitigate the impact of inflation and tariffs, and to drive operating leverage.
- Investment in Innovation is Increasing: Medtronic is increasing its investment in R&D to support future growth, particularly in areas like Cardiac Ablation, Surgical Robotics, and Renal Denervation, indicating a commitment to long-term innovation and market leadership.
- External Factors are Being Managed: The company is proactively managing external factors like tariffs and foreign exchange rates through hedging, dynamic pricing, and structural changes to lower exposure, demonstrating a proactive approach to risk management.
Focus of management’s prepared remarks
- Q4 Performance Highlights: Medtronic achieved a strong finish to fiscal year 2025, with 5.4% organic revenue growth. Cardiovascular growth accelerated to 8%, driven by Cardiac Ablation Solutions (CAS). Neuromodulation and Diabetes also delivered double-digit growth.
- Cardiovascular Portfolio: Innovation drove broad-based growth in Cardiovascular, with double-digit growth in Cardiac Ablation Solutions, Structural Heart, and Cardiac Surgery. The Affera PFA products are experiencing high demand and positive physician feedback.
- Cardiac Ablation Solutions (CAS): CAS growth accelerated to nearly 30%, with strong growth in the US and international markets. The company is focused on becoming the leader in the rapidly growing cardiac ablation space.
- Cardiac Rhythm Management (CRM): CRM grew 7%, with strong adoption of the Aurora EV-ICD and growth in leadless pacing and conduction system pacing.
- Structural Heart: Structural Heart grew 10%, driven by the Evolut TAVR platform. Positive clinical evidence and sales execution are contributing to market share gains.
- Hypertension (RDN): Medtronic is ramping up market development activities for the Simplicity blood pressure procedure, awaiting reimbursement coverage from CMS. They expect Simplicity revenue to meaningfully ramp when coverage is secured.
- Neuroscience Portfolio: Cranial and Spinal Technologies (CST) grew mid-single-digits, driven by the AiBLE spine ecosystem. Neuromodulation grew 10%, with strong growth in Pain Stim and Brain Mod.
- Medical Surgical Portfolio: Surgical business grew 2%, with strong growth in emerging markets and advanced energy. The Hugo soft tissue robotic platform continues to reach important milestones.
- Diabetes: Diabetes grew 12%, driven by pump, CGM, and consumables. The company announced plans to separate the Diabetes business into a standalone public company.
- Diabetes Separation: The separation of the Diabetes business is seen as a win for both Medtronic and the new Diabetes company. It will allow Medtronic to focus on high-margin growth markets and improve its financial profile.
- Fiscal Year 2026 Guidance: Medtronic expects approximately 5% organic revenue growth in fiscal year 2026 and is working to manage external factors impacting the guide.
- Leadership Transition: Sean Salmon is moving on, and Skip Kiil will lead the Cardiovascular portfolio going forward.
Focus of the analyst Q&A
- Guidance Philosophy:
- What assumptions are built into the revenue guidance, particularly regarding the pipeline?
- What level of conservatism is included in the below-the-line items for EPS growth?
- Is there potential to offset headwinds if revenue exceeds expectations?
- Fiscal Year 2027 EPS Growth:
- What is the framework and visibility supporting the forecast of high single-digit EPS growth in fiscal year 2027?
- Impact of Tariffs:
- What is the impact of tariffs on operating profit?
- What is the impact of the diabetes separation on EPS?
- Diabetes Spin-Off:
- Why not break Medtronic into four separate businesses?
- Why spin off Diabetes if it's growing above the corporate average?
- Earnings and Margins:
- Why is earnings growth back-end loaded in the fiscal year 2026 guidance?
- Can Medtronic commit to EPS growing above revenues irrespective of the FX environment?
- Renal Denervation (RDN):
- What preparations are hospitals making for renal denervation and reimbursement?
- How should the revenue ramp for RDN be compared to PFA adoption?
- Diabetes Pipeline:
- What are the pipeline ideas for diabetes, their differentiation, and timelines?
- Operating Line Growth:
- Is the 7% operating line growth inclusive of all investments and gross margin headwinds?
- Spine Business:
- What is the like-for-like spine growth compared to pure-play peers?
- Cardiac Ablation Solutions (CAS):
- How to think about the ramp from $1 billion to $2 billion in the CAS business?
- CAS and RDN:
- What is the mix of cryo in the CAS business, and any color on pricing?
- What patient subset is expected to get coverage for RDN?
- Portfolio Management Strategy:
- How should we think about the portfolio management strategy going forward, given the diabetes separation?
Summary
-
Financial Performance
Medtronic reported a strong Q4, with organic revenue growth of 5.4% and adjusted EPS of $1.62, up 11%. This exceeded expectations, driven by strong performance in CRM, Structural Heart & Aortic, Diabetes, and Neuromod. Full-year fiscal 2025 revenue grew 5% organically, and EPS grew 6% (10% on a constant currency basis). The company is guiding for approximately 5% organic revenue growth in fiscal year 2026.
-
Revenue Drivers
Growth was broad-based geographically, with 5% growth in the US, high single-digit growth in Japan, and mid-single-digit growth in Western Europe and Emerging Markets. Key growth drivers included Cardiovascular (8% growth, driven by Cardiac Ablation Solutions (CAS)), Neuromodulation (10% growth), and Diabetes (12% growth). CAS and ENT both reached $1 billion in annual revenue. Specific products driving growth include Affera PFA products, Aurora EV-ICD, Evolut TAVR platform, and Inceptiv closed-loop spinal cord stimulator.
-
Profit Margins and Cost Management
Adjusted gross margin was 65.1%, down 70 basis points year-over-year due to mix from Diabetes and CAS, as well as foreign exchange, but unchanged on a constant currency basis. The company is focused on pricing discipline, COGS efficiency programs, and leveraging SG&A expenses. They expect adjusted gross and operating margins to improve by approximately 50 and 100 basis points, respectively, upon full separation of the Diabetes business. Significant leverage was driven in SG&A, particularly with G&A, while increasing investment in R&D.
-
Guidance and Outlook
Medtronic expects approximately 5% organic revenue growth in fiscal year 2026, including 4.5% to 5% growth in Q1. They anticipate a net tariff impact to COGS of approximately $200 million to $350 million. Excluding tariffs, they expect approximately 4% EPS growth in fiscal year 2026. They expect to return to high single-digit EPS growth in fiscal year 2027 upon the Diabetes separation. Q1 EPS is expected in the range of $1.22 to $1.24.
-
Strategic Initiatives
The major strategic initiative announced was the plan to separate the Diabetes business into a standalone public company via an IPO and subsequent split-off. This is expected to improve Medtronic's gross and operating margins and be accretive to EPS. The company is also focused on active portfolio management, increasing investment in growth drivers like Cardiac Ablation, Surgical Robotics, and RDN, and driving innovation in areas like spine with the AiBLE ecosystem.
-
Management Commentary
Management expressed confidence in the company's durable growth drivers and the potential for accelerated earnings leverage. They highlighted the strong underlying fundamentals of the business and the positive impact of recent changes to the operating model, leadership, and investment priorities. They emphasized a commitment to both the Medtronic Mission and Performance. The tone was optimistic, with a clear focus on driving shareholder value through strategic portfolio management and operational improvements.
-
Industry and Market Conditions
Medtronic views the markets they operate in as attractive, with significant growth opportunities in areas like cardiac ablation, hypertension, and spine. They are closely monitoring macroeconomic factors like tariffs and foreign exchange rates and are taking steps to mitigate their impact. They see enabling technology as a key differentiator in the spine market and are focused on establishing leadership positions in high-growth areas.
Comparative analysis
Add to research
Benchmarks (as of 2025-06-27)
Health Care Select Sector SPDR Fund (XLV)
- Performance Comparison:
- Medtronic Plc (MDT) has shown mixed performance compared to the Health Care Select Sector SPDR Fund (XLV). Over the past year, MDT has significantly outperformed XLV, with returns of 15.24% compared to -6.02%. However, over a 3-year period, MDT has underperformed XLV, with returns of 5.12% compared to 9.44%. More recently, YTD performance shows MDT outperforming XLV with 8.98% compared to -1.83%.
- Risk and Return Analysis:
- The annualized returns indicate that MDT has outperformed XLV over the past 1 and 2 years, but underperformed over the past 3 years. Specifically, the 1-year annualized return for MDT is 15.24% compared to -6.02% for XLV.
- MDT's annualized volatility has generally been higher than XLV's, indicating that MDT is the riskier investment. For example, in Q4 2022, MDT's volatility ranged from 20.49% to 35.64%, while XLV's ranged from 13.94% to 23.13%.
- MDT's maximum drawdown was -45.1% on 10/27/2023, which is significantly larger than XLV's maximum drawdown of -17.11% on 05/14/2025. This suggests that MDT carries a higher risk of significant losses from previous peaks.
- Risk-Adjusted Performance:
- The Sharpe ratios for MDT are generally lower than those of XLV, indicating that XLV has offered better risk-adjusted returns historically.
- The beta values for both MDT and XLV are consistently below 1, indicating that both are less volatile than the overall market. MDT's beta is slightly higher than XLV's, suggesting it is somewhat more sensitive to market movements.
- Overall Assessment:
- MDT has demonstrated higher return potential over the last year but comes with significantly higher volatility and drawdown risk compared to XLV. The lower Sharpe ratio suggests that the returns may not adequately compensate for the level of risk undertaken. Recent trends indicate fluctuating volatility and Sharpe ratios for MDT, while XLV has shown more stable performance. Investors should consider their risk tolerance and investment horizon when choosing between MDT and XLV.
Peers Price History(as of 2025-06-27)
-
Performance Comparison:
- Medtronic Plc (MDT) has shown mixed performance compared to Edwards Lifesciences Corp. (EW). Over the past year, MDT has outperformed EW significantly, with a 1-year return of 15.24% compared to EW's -13.34%. However, in shorter periods like 3 months, MDT has underperformed EW, with returns of -3.48% and 7.91% respectively.
-
Risk and Return Analysis:
- Medtronic Plc (MDT) has demonstrated higher annualized returns over the 1, 2, and 3-year periods compared to Edwards Lifesciences Corp. (EW). For example, the 1-year annualized return for MDT is 15.24%, while EW's is -13.34%.
- The annualized volatility for MDT has generally been lower than that of EW, indicating a less volatile investment. For instance, in Q3 2024, MDT's volatility ranged from 14.84% to 22%, while EW's ranged from 18.51% to 96.95%.
- Medtronic Plc (MDT) had a maximum drawdown of -45.1% on 10/27/2023, which is less severe than Edwards Lifesciences Corp. (EW)'s maximum drawdown of -54.32% on 07/25/2024, suggesting a lower risk profile.
-
Risk-Adjusted Performance:
- The Sharpe Ratio for MDT has fluctuated, with periods of both positive and negative values. As of Q2 2025, MDT's Sharpe Ratio was 0.68, while EW's was -0.2, indicating that MDT offered a better risk-adjusted return in the most recent period.
- Medtronic Plc (MDT)'s Beta has generally remained below 1, indicating lower sensitivity to market movements compared to Edwards Lifesciences Corp. (EW), whose Beta has fluctuated around 1.
-
Overall Assessment:
- Medtronic Plc (MDT) presents a mixed but generally more stable investment profile compared to Edwards Lifesciences Corp. (EW). While MDT has shown periods of underperformance in the short term, its annualized returns, lower volatility, and less severe drawdowns suggest a more conservative risk profile. The Sharpe Ratio indicates that MDT has offered better risk-adjusted returns recently.
- A key trend is the higher volatility observed in Edwards Lifesciences Corp. (EW), particularly in Q3 2024, which may deter risk-averse investors. Abbott Laboratories (ABT) generally shows a more favorable risk-adjusted return profile with lower volatility and drawdowns, making it a potentially more stable investment compared to both MDT and EW.
Peers Fundamentals(as of 2025-04-30)
-
Market Position and Size:
- Medtronic (MDT) has a substantial market capitalization of $110,213.99 million, positioning it as a major player in the Health Technology sector.
- Its revenue of $33,537 million and EBITDA of $9,025 million demonstrate a significant operational scale.
- While MDT's market cap is larger than Edwards Lifesciences (EW), it is smaller than Abbott Laboratories (ABT), indicating it is not the largest company in its immediate peer group.
- MDT's market position is strong, but it is important to consider its relative size and performance compared to industry leaders like ABT.
-
Profitability and Efficiency:
- MDT's Gross Profit Margin of 59.79% is robust, significantly exceeding the industry average, indicating efficient core operations.
- Its EBITDA Margin of 26.91% also surpasses the industry average, reflecting effective management of operating expenses.
- However, MDT's Net Profit Margin of 13.9% is lower than both EW and ABT, suggesting potential areas for improvement in managing overall expenses or tax liabilities.
- While MDT demonstrates strong profitability in its core operations, its overall efficiency in converting revenue to net income lags behind its top peers.
-
Financial Health and Stability:
- MDT's Current Ratio of 1.85 and Quick Ratio of 1.42 indicate adequate liquidity, although these ratios are lower than EW and the industry average.
- Its Total Debt to Total Equity Ratio of 61.69 is notably higher than EW and ABT, suggesting a more leveraged financial structure.
- MDT's Debt / EBITDA ratio of 3.16 is higher than its peers, indicating a greater reliance on debt to finance its operations.
- MDT's financial health is stable, but its higher debt levels compared to peers could pose risks if earnings decline or interest rates rise.
-
Valuation and Market Perception:
- MDT's Enterprise Value To Sales ratio of 3.85 and Enterprise Value To EBITDA ratio of 14.2 are lower than its peers and the industry average, suggesting it may be undervalued.
- Its Price To Earnings ratio of 23.8 is lower than EW but higher than ABT, indicating a mixed market perception of its earnings potential.
- MDT's Price to Book Ratio of 2.3 and Price To Sales Ratio of 3.31 are also lower than its peers and the industry average, further supporting the possibility of undervaluation.
- The market may be undervaluing MDT due to concerns about its growth prospects or financial leverage, presenting a potential opportunity for investors.
-
Cash Flow and Capital Management:
- MDT's Net Operating Cash Flow of $7,044 million and Free Cash Flow of $5,185 million demonstrate strong cash generation capabilities.
- Its Total Capital Expenditure of $1,859 million reflects ongoing investments in its business.
- MDT's cash flow generation is robust, providing financial flexibility for investments, acquisitions, and shareholder returns.
- Effective capital management will be crucial for MDT to maintain its competitive position and drive future growth.
-
Growth and Future Prospect:
- MDT's revenue growth has been inconsistent, with a 3-year CAGR of 1.91% and a 5-year CAGR of 3.01%.
- Its Net Income and Basic Earnings per Share growth rates have been highly volatile.
- MDT's most recent year-over-year growth rates are higher than its 5-year CAGRs for EBITDA, Net Income, Basic Earnings per Share, Free Cash Flow, and Free Cash Flow Margin, indicating an acceleration trend.
- MDT's future prospects depend on its ability to improve its revenue growth and manage its debt levels effectively.
-
Potential for Investment:
- MDT presents a mixed investment case. Its strong core profitability and cash flow generation are attractive, but its higher debt levels and inconsistent revenue growth raise concerns.
- Its lower valuation metrics compared to peers may indicate an opportunity for investors, but it also reflects the market's concerns about its growth prospects and financial health.
- Investors should carefully consider MDT's debt levels and growth potential before making an investment decision.
- MDT's potential for investment lies in its ability to improve its revenue growth, manage its debt levels, and capitalize on its strong core profitability and cash flow generation.
-
Key Risks and Considerations:
- MDT's higher debt levels compared to peers could pose risks if earnings decline or interest rates rise.
- Its inconsistent revenue growth raises concerns about its ability to maintain market share and fund future investments.
- The market's perception of MDT as potentially undervalued could change if its growth prospects do not improve.
- Investors should carefully monitor MDT's debt levels, revenue growth, and market perception before making an investment decision.
-
Overall Assessment:
- MDT is a major player in the Health Technology sector with strong core profitability and cash flow generation.
- However, its higher debt levels and inconsistent revenue growth raise concerns about its financial health and future prospects.
- MDT's lower valuation metrics compared to peers may indicate an opportunity for investors, but it also reflects the market's concerns about its growth prospects and financial leverage.
- Overall, MDT presents a mixed investment case that requires careful consideration of its strengths, weaknesses, and potential risks.
Comparison metrics
Add to research