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Medtronic plc (NYSE:MDT): Is It A Smart Long Term Opportunity?

Simply Wall St

In April 2019, Medtronic plc (NYSE:MDT) announced its earnings update. Overall, analysts seem fairly confident, as a 20% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of 7.3%. By 2020, we can expect Medtronic’s bottom line to reach US$5.6b, a jump from the current trailing-twelve-month of US$4.6b. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Medtronic in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Medtronic

How will Medtronic perform in the near future?

The longer term view from the 25 analysts covering MDT is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of MDT's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:MDT Past and Future Earnings, August 19th 2019

This results in an annual growth rate of 14% based on the most recent earnings level of US$4.6b to the final forecast of US$7.1b by 2022. This leads to an EPS of $5.29 in the final year of projections relative to the current EPS of $3.44. In 2022, MDT's profit margin will have expanded from 15% to 20%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Medtronic, there are three fundamental factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Medtronic worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Medtronic is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Medtronic? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.