Medtronic Inc. Quarterly Valuation – December 2014 $MDT

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Medtronic should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns about the company. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.49 in 2011 to an estimated $3.45 for 2015. This is a very strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 6.52% over the next 7-10 years. In fact, actual historical growth is about 7.77% per year, so the market has priced in a slight earnings drop to a more sustainable level over the long term. The ModernGraham valuation model therefore returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of Medtronic Inc. (MDT) for greater perspective!

Read the full valuation on Seeking Alpha!

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Disclaimer:  The author did not hold a position in Medtronic Inc. (MDT) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.


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