Health care stock Stryker Corporation (SYK) recently launched its new product Citrefix™, a suture anchor system for foot and ankle surgical procedures, marking a significant addition to its product portfolio.
Moreover, the company is expected to benefit amid the solid prospects of the healthcare industry. The global healthcare consulting services market is estimated to grow at a CAGR of 8.3% from 2023 to 2030.
SYK witnessed steady growth in the last reported quarter. Kevin A. Lobo, Chair and CEO, said, “We delivered strong organic sales growth in the quarter, despite product shortages and disruptions to full return of surgeries.” Hedge Funds have increased SYK holdings by 1.30 million shares.
Furthermore, the company has a solid dividend-paying record, making it an attractive investment option amid worldwide recessionary concerns. SYK has paid dividends for 29 consecutive years. Its dividend payouts have increased at a 10.2% CAGR for the past five years. Its current dividend yield is 1.17%, while its four-year average yield is 1.07%.
SYK has gained 8.8% over the past month to close the last trading session at $256.25. It has gained 27.6% over the past six months and 4.8% year-to-date.
Here is what could shape SYK’s performance in the near term:
Solid Financials
SYK’s net sales came in at $4.48 billion for the third quarter that ended September 30, 2022, up 7.7% year-over-year. Its gross profit came in at $2.78 billion, up 5.3% year-over-year. Moreover, its operating income came in at $808 million, up 40.8% year-over-year.
Also, its net earnings came in at $816 million, up 86.3% year-over-year. Its EPS came in at $2.14, up 87.7% year-over-year.
Favorable Analyst Expectations
Analysts expect SYK’s revenue to increase 6.4% year-over-year to $18.20 billion for fiscal 2022. Its revenue is expected to increase 5.6% year-over-year to $19.21 billion in 2023. Its EPS is estimated to rise 7.6% year-over-year to $9.87 in 2023.
In addition, its EPS is expected to increase by 7.6% per annum for the next five years.
Robust Profitability
SYK’s trailing-12-month gross profit margin of 63.91% is 16.2% higher than the industry average of 54.99%. Its trailing-12-month EBITDA margin of 24.82% is 566.1% higher than the industry average of 3.73%, while its trailing-12-month net income margin of 13.69% is higher than the negative industry average of 5.94%.
Furthermore, its trailing-12-month ROCE, ROTC, and ROTA of 16.04%, 7.62%, and 6.83% are higher than the industry averages of negative 39.73%, 22.01%, and 31.07%, respectively.
POWR Ratings Reflect Promising Outlook
SYK has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. SYK has a B grade for Growth, consistent with its solid financials in the latest reported quarter.
It has a B grade for Stability, in sync with its beta of 0.95.
In the 142-stock Medical - Devices & Equipment industry, SYK is ranked #19.
Click here for the additional POWR Ratings for SYK (Value, Momentum, Quality, and Sentiment).
View all the top stocks in the Medical - Devices & Equipment industry here.
Bottom Line
SYK possesses solid fundamentals. It surpassed revenue estimates by $15.75 million in its latest reported quarter, and analysts are bullish on its near-term prospects. Moreover, given its robust profitability and positive growth outlook, SYK might be an ideal buy now.
How Does Stryker Corporation (SYK) Stack up Against Its Peers?
While SYK has an overall POWR Rating of B, one might consider looking at its industry peers, Olympus Corporation (OCPNY), FONAR Corporation (FONR), and Avanos Medical, Inc. (AVNS), which have an overall A (Strong Buy) rating.
SYK shares were trading at $261.91 per share on Monday afternoon, up $5.66 (+2.21%). Year-to-date, SYK has gained 7.13%, versus a 2.18% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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