Automation is rapidly advancing, reshaping industries and consumer preferences with key trends such as robotics and AI, driving innovation and efficiency across various industries into 2024 and beyond. Amid this backdrop, investors could consider keeping an eye on fundamentally strong robotics stocks such as Medtronic plc (MDT), PTC Inc. (PTC), and UiPath Inc. (PATH), in this increasingly automated world.
Industrial automation, boosted by AI, is growing like never before in sectors such as the medical, tech, and software sectors. Industrial robotics had record shipments last year. This year, AI advancements are expected to enhance robot capabilities and sales, driving industry efficiency. The global robotics technology market is projected to grow at a CAGR of 14.7% to surpass $283.19 billion by 2032.
Medical robotics improve surgical precision and patient outcomes. Trends like robotic-assisted surgery and device-based therapies boost industry prospects. Notably, in 2024, the global medical service robotics market generated $11.2 billion, with forecasts for the market reaching nearly $21 billion by 2028.
Moreover, labor shortages and rising costs are driving demand for robots in the software industry. Robotics are evolving with better intelligence, adaptability, and decision-making. The software sector's growth highlights its key role in expanding robotic applications across industries. The robot software market is projected to reach $53 billion by 2029, with a 21.62% CAGR.
Considering these trends, let’s assess the fundamentals of the abovementioned stocks.
Medtronic plc (MDT)
Headquartered in Dublin, Ireland, Medtronic plc develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. It operates through four segments: Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and The Diabetes Operating Unit segment.
On June 21, 2024, MDT announced that its MiniMed 780G system effectively addresses persistent blood sugar challenges in people with type 1 diabetes. The system's advanced algorithm significantly reduces early morning hyperglycemia (dawn phenomenon) and improves overnight sleep, demonstrating its ability to enhance diabetes management and quality of life.
On May 17, 2024, MDT announced positive results for its Affera Mapping and Ablation System with Sphere-9 Catheter. The system achieved strong safety and efficacy endpoints in treating persistent atrial fibrillation, demonstrating significant advancements in treatment efficiency and patient quality of life at the Heart Rhythm Society's 2024 Annual Meeting.
In terms of the trailing-12-month levered FCF margin, MDT’s 16.86% is significantly higher than the 1.31% industry average. Its 27.98% trailing-12-month net income margin is 356.6% higher than the 6.13% industry average. Likewise, the stock’s 19.80% trailing-12-month EBIT margin is 950.9% higher than the 1.88% industry average.
MDT’s net sales for its fourth quarter ended April 26, 2024, increased marginally from the prior-year period to $8.59 billion. The company’s non-GAAP operating profit came in at $2.31 billion.
Its non-GAAP net income and non-GAAP EPS amounted to $1.93 billion and $1.46, respectively. Moreover, MDT’s total assets as of April 26, 2024, were $21.94 billion, compared to $21.68 billion as of April 28, 2023.
Street expects MDT’s revenue for the quarter ending July 31, 2024, to increase 2.5% year-over-year to $7.90 billion. Its EPS for the quarter ending October 31, 2024, is expected to grow marginally year-over-year to $1.26. It surpassed the Street EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 1.1% to close the last trading session at $77.06.
MDT’s POWR Ratings reflect robust prospects. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #14 out of 133 stocks in the Medical - Devices & Equipment industry. It has a B grade for Value and Stability. Click here to see MDT’s Growth, Momentum, Sentiment, and Quality ratings.
PTC Inc. (PTC)
PTC operates as a software company in the Americas, Europe, and the Asia Pacific. The company provides software solutions such as Windchill, ThingWorx, ServiceMax, and Arena.
In terms of the trailing-12-month Return on Total Assets, PTC’s 4.64% is 157.8% higher than the 1.80% industry average. Likewise, its 79.85% trailing-12-month gross profit margin is 62.7% higher than the 49.09% industry average. Furthermore, its 27.09% trailing-12-month EBITDA margin is 174.5% higher than the 9.87% industry average.
PTC’s revenue for the fiscal second quarter that ended March 31, 2024, grew 11.2% year-over-year to $603.07 million. Its free cash flow rose 19.3% from the year-ago quarter to $247.09 million. PTC’s non-GAAP net income and non-GAAP earnings per share stood at $176.35 million and $1.46, up 28% and 25.9% over the prior-year quarter, respectively.
For the quarter ending September 30, 2024, PTC’s EPS and revenue are expected to increase 14.9% and 13% year-over-year to $1.38 and $617.57 million, respectively. PTC surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 27% to close the last trading session at $176.69.
PTC’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Growth and Quality. Within the Software – Application industry, it is ranked #30 out of 135 stocks. To access the additional POWR Ratings of PTC for Value, Momentum, Stability, and Sentiment, click here.
UiPath Inc. (PATH)
PATH provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions primarily for international markets. The company offers a suite of interrelated software to build, manage, run, engage, measure, and govern automation within organizations.
On July 2, 2024, PATH announced new platform features, including UiPath Autopilot and GenAI, to enhance automation capabilities. These innovations, showcased at UiPath on Tour London, aim to accelerate development and improve outcomes with AI integration.
On May 21, 2024, PATH announced an integration with Microsoft Copilot for Microsoft 365, allowing joint customers to automate knowledge work and enhance user experiences directly within Microsoft Teams. This integration aims to boost productivity by leveraging PATH’s AI-powered automation capabilities.
In terms of the trailing-12-month levered FCF margin, PATH’s 30.36% is 208% higher than the 9.86% industry average. Similarly, its 84.74% trailing-12-month gross profit margin is 72.6% higher than the industry average of 49.09%.
PATH’s total revenue for the first quarter that ended January 31, 2024, increased 15.7% year-over-year to $335.11 million. Its non-GAAP gross profit rose 13.7% over the prior-year quarter to $288.21 million. Moreover, its non-GAAP net income and net income per share stood at $73.22 million and $0.13, up 17.8% and 18.2% from the prior-year quarter, respectively.
Analysts expect PATH’s revenue for the quarter ending July 31, 2024, to increase 5.7% year-over-year to $303.67 million. Its EPS for fiscal 2026 is expected to rise 18.7% year-over-year to $0.45. It surpassed the revenue estimates in each of the trailing four quarters. Over the past month, the stock has gained marginally to close the last trading session at $12.09.
PATH’s POWR Ratings reflect this positive outlook. It has a B grade for Growth and Quality. Within the A-rated Software - SAAS industry, it is ranked #9 out of 19 stocks. To see PATH’s Value, Momentum, Stability, and Sentiment ratings, click here.
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MDT shares were trading at $78.10 per share on Thursday afternoon, up $1.04 (+1.35%). Year-to-date, MDT has declined -3.57%, versus a 17.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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