Medical Stocks

Stryker Corporation Quarterly Valuation – March 2015 $SYK

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Stryker Corporation is suitable for the Enterprising Investor, but not for the more conservative Defensive Investor, who is concerned about the insufficient earnings growth over the last ten years, along with the high PEmg and PB ratios. The Enterprising Investor’s only initial concern is the lack of earnings growth over the last five years. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, Stryker has seen its EPSmg (normalized earnings) drop from $2.81 in 2010 to only $2.50 for 2014. This lack of demonstrated growth does not support the market’s implied estimate for earnings growth of 14.22% over the next 7-10 years. Therefore, the model returns an estimate of intrinsic value falling below the current price, indicating the company is overvalued at the present time.

Read the full valuation on Seeking Alpha!

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Disclaimer: The author did not hold a position in Stryker Corporation (SYK) 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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