Medtronic (MDT) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Updated
Vanda (VNDA) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

Medtronic (MDT) closed at $91.55 in the latest trading session, marking a +1.93% move from the prior day. This move outpaced the S&P 500's daily gain of 0.65%. Meanwhile, the Dow gained 0.79%, and the Nasdaq, a tech-heavy index, added 1.01%.

Heading into today, shares of the medical device company had lost 7.85% over the past month, outpacing the Medical sector's loss of 9.59% and lagging the S&P 500's loss of 6.82% in that time.

Wall Street will be looking for positivity from MDT as it approaches its next earnings report date. This is expected to be November 20, 2018. The company is expected to report EPS of $1.14, up 6.54% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.35 billion, up 4.27% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.12 per share and revenue of $30.43 billion. These totals would mark changes of +7.34% and +1.6%, respectively, from last year.

Any recent changes to analyst estimates for MDT should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. MDT is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that MDT has a Forward P/E ratio of 17.55 right now. This valuation marks a discount compared to its industry's average Forward P/E of 24.95.

It is also worth noting that MDT currently has a PEG ratio of 2.39. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MDT's industry had an average PEG ratio of 2.29 as of yesterday's close.

The Medical - Products industry is part of the Medical sector. This group has a Zacks Industry Rank of 102, putting it in the top 40% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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