Medtronic plc (MDT) Stock Analysis
Medtronic plc (MDT) Stock Analysis
Analysis from 10-Q filed 2025-11-25. Data as of Q1 2026.
Overall Grade: F (Concerning)
Medtronic plc faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 6.5% | Below expectations |
| FCF Margin | 15.2% | Strong cash generation |
| Debt/Equity | 0.6x | Moderate leverage |
Investment Thesis: Healthy free cash flow margin of 15.2% provides financial flexibility for growth and shareholder returns.
Explore Medtronic plc: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: Medtronic plc earns 6.5% ROIC, Top 50% in Healthcare
Medtronic plc's trailing-twelve-month ROIC of 6.5% ranks Top 50% in Healthcare companies (sector median: -3.9%), driven by NOPAT margin of 14.2% combined with asset turnover of 0.4x. Source: 10-Q filed 2025-11-25. Gross margin of 64.9% with operating margin at 17.0% reflects strong pricing power.
| Metric | MDT | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.5% | Warning | Above sector median of -3.9% |
| Return on Equity (ROE) | 9.5% | Adequate | Moderate equity returns |
| Gross Margin | 64.9% | Excellent | Strong pricing power |
| Operating Margin | 17.0% | Good | Efficient operations |
Cash Flow: Medtronic plc generates $5.4B FCF at 15.2% margin, positive NaN/8 quarters
Medtronic plc generated $5.4B in free cash flow (TTM), a 15.2% FCF margin, a margin that ranks Top 5% in Healthcare. Operating cash flow exceeds net income by 1.6x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-25.
| Metric | MDT | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 15.2% | Good | Excellent cash conversion |
| Free Cash Flow (TTM) | $5.4B | Good | Positive cash generation |
| OCF/Net Income | 1.6x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: Medtronic plc at 0.6x leverage
Medtronic plc's debt-to-equity ratio of 0.6x reflects moderate leverage. Total debt of $28.1B offset by $8.4B in cash. Source: 10-Q filed 2025-11-25.
| Metric | MDT | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.6x | Good | Moderate leverage |
| Net Cash Position | $-19.7B | Warning | Net debt position |
Valuation: Medtronic plc trades at 28.0x earnings
Medtronic plc trades at a P/E of 28.0x. Free cash flow yield of 4.2% reflects market expectations for growth.
| Metric | MDT | Rating | Context |
|---|---|---|---|
| P/E Ratio | 28.0x | Adequate | Premium valuation |
| EV/Sales | 4.2x | Good | Growth premium priced in |
| FCF Yield | 4.2% | Good | Lower cash yield |
| Dividend Yield | 2.8% | Adequate | Growth focus over income |
Capital Allocation: Medtronic plc returns 3.5% shareholder yield
Medtronic plc's total shareholder yield is 3.5% (dividends 2.8% + buybacks 0.7%). Source: 10-Q filed 2025-11-25.
| Metric | MDT | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 3.5% | Good | Dividend + buyback yield combined |
| Buyback Yield | 0.7% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $4.5B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.5% | Top 50% | - |
| Free Cash Flow Margin | 15.2% | Top 5% | - |
| Gross Margin | 64.9% | Top 50% | 1.0x above |
| Operating Margin | 17.0% | Top 25% | 8.9x above |
| Return on Equity (ROE) | 9.5% | Top 50% | - |
| P/E Ratio | 28.0x | N/A | - |
Financial Scorecard
| Metric | MDT | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 6.5% | Warning | Top 50% of sector (median: -3.9%) |
| Free Cash Flow Margin | 15.2% | Good | Top 5% of sector (median: 0.0%) |
| Gross Margin | 64.9% | Excellent | Top 50% of sector (median: 64.0%) |
| Debt to Equity Ratio | 57.3% | Good | Moderate leverage |
| P/E Ratio (Price-to-Earnings) | 28.0x | Adequate | Growth premium |
| Free Cash Flow Yield | 4.2% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is Medtronic plc's Return on Invested Capital (ROIC)?
Medtronic plc (MDT) has a trailing twelve-month Return on Invested Capital (ROIC) of 6.5%. This compares above the sector median of -3.9%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is Medtronic plc's Free Cash Flow Margin?
Medtronic plc (MDT) has a free cash flow margin of 15.2%, generating $5.4 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is Medtronic plc stock overvalued or undervalued?
Medtronic plc (MDT) trades at a P/E ratio of 28.0x, which is above the sector median of N/A. The EV/Sales multiple is 4.2x. Free cash flow yield is 4.2%, which is in line with market averages.
Q: Does Medtronic plc pay a dividend?
Medtronic plc (MDT) currently pays a dividend yield of 2.8%. Including share buybacks, the total shareholder yield is 3.5%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: How much debt does Medtronic plc have?
Medtronic plc (MDT) has a debt-to-equity ratio of 0.6x with total debt of $28.1 billion. Net debt position is $19.7 billion.
Q: What is Medtronic plc's revenue and earnings growth?
Medtronic plc (MDT) grew revenue by 6.9% year-over-year. Earnings per share increased by 9.1% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is Medtronic plc buying back stock?
Medtronic plc (MDT) repurchased $874.0 million of stock over the trailing twelve months. This represents a buyback yield of 0.7%.
Q: How does Medtronic plc compare to competitors in Healthcare?
Compared to other companies in Healthcare, Medtronic plc (MDT) shows: ROIC of 6.5% is above the sector median of -3.9% (Top 32%). FCF margin of 15.2% exceeds the sector median of 0.0% (Top 0% of sector). Gross margin at 64.9% is 0.9 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Healthcare companies with available SEC filings.
Q: What warning signs should I watch for with Medtronic plc?
Medtronic plc (MDT) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-11-25. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.