Medtronic (MDT) 2013 Review

Medtronic Inc. (MDT) is the world’s largest manufacturer of implantable biomedical devices in the cardiac, neurological and vascular markets. The company has grown profits and dividends 12-17% annually over the last ten years earning a return on equity in excess of 20%.   Facilitating the continuation of this trend:

(1) MDT has strong R&D program and consequently has a deep product pipeline insuring strong organic growth. It expects to launch 20 new products in the next 12 months,

(2) market response to recently launched products,

(3) expansion into international markets,

(4) a stock buy back program.

Negatives:

(1)    it is in a highly competitive industry,

(2)    economic uncertainty can impact customer willingness to incur the cost of new procedures,

(3) recent FDA warning letter on its Neuromodulation corrective and preventative action,

MDT is rated A++ by Value Line, carries a 30% debt to equity ratio and its stock yields 2.3%.

   Statistical Summary

                 Stock      Dividend         Payout      # Increases  

               Yield      Growth Rate     Ratio        Since 2003

MDT         2.3%          8%                28%              10

Ind Ave      1.7            6*                  24                NA 

                Debt/                       EPS Down       Net        Value Line

                Equity         ROE      Since 2003      Margin       Rating

MDT        30%            19%           0                 24%           A++

Ind Ave     23               14            NA               14              NA

*the majority of companies in MDT industry do not pay a dividend

 

      Chart

            Note: MDT stock made good progress off its March 2009 low, quickly surpassing the downtrend off its September 2008 high (straight red line).  However, it took much longer to successfully challenge the November 2008 trading high (green line).  Long term, the stock is in a trading range; the blue line is the lower boundary.  Intermediate term, it is in an uptrend (purple lines).  Short term, it is in an uptrend (brown line).  The wiggly red line is the 50 day moving average.  The Dividend Growth and Aggressive Growth Portfolios own full positions; though the stock has been traded twice, buying in the low 30’s and selling in the low 40’s.  The upper boundary of MDT’s Buy Value Range is $31; the lower boundary of its Sell Half Range is $49.

  

http://finance.yahoo.com/q?s=MDT

3/13