July 16, 2017

NYSE: MDT

MEDTRONIC PLC
BUY HOLD SELL

BUY
RATING SINCE 11/17/2011
A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F TARGET PRICE $101.42

Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 7/13/2017
$1.72 1.95% 1.05 $119.3 Billion $69.35-$89.72 $87.81

Sector: Health Care Sub-Industry: Health Care Equipment Source: S&P

Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
MDT BUSINESS DESCRIPTION
Medtronic plc manufactures and sells 105
device-based medical therapies to hospitals, TARGET
TARGET
TARGETPRICE
PRICE
PRICE$101.42
$101.42
$101.42 100
physicians, clinicians, and patients worldwide.
95
STOCK PERFORMANCE (%)
90
3 Mo. 1 Yr. 3 Yr (Ann)
Price Change 9.74 -1.06 11.24 85
80
GROWTH (%)
Last Qtr 12 Mo. 3 Yr CAGR 75
Revenues 4.61 3.04 20.44
70
Net Income 5.43 13.84 9.53
EPS 7.69 16.53 -1.35 65
Rating History
RETURN ON EQUITY (%) BUY
MDT Ind Avg S&P 500
Volume in Millions
Q4 2016 8.00 14.68 13.16 60
Q4 2015 6.79 10.30 11.83 40
Q4 2014 5.02 19.15 13.71 20
0
P/E COMPARISON 2015 2016 2017
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History

RECOMMENDATION
We rate MEDTRONIC PLC (MDT) a BUY. This is based on the convergence of positive investment measures,
which should help this stock outperform the majority of stocks that we rate. The company's strengths can be
seen in multiple areas, such as its revenue growth, growth in earnings per share, reasonable valuation levels,
expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that
the company has had lackluster performance in the stock itself.
30.38 44.00 24.41
MDT Ind Avg S&P 500 HIGHLIGHTS
MDT's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year
prior, revenues slightly increased by 4.6%. This growth in revenue appears to have trickled down to the
EPS ANALYSIS¹ ($) company's bottom line, improving the earnings per share.

MEDTRONIC PLC has improved earnings per share by 7.7% in the most recent quarter compared to the same
quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the
past two years. We feel that this trend should continue. During the past fiscal year, MEDTRONIC PLC
increased its bottom line by earning $2.89 versus $2.48 in the prior year. This year, the market expects an
improvement in earnings ($4.96 versus $2.89).
Q1 0.87
Q2 0.83
Q3 0.98
Q4 0.00

Q1 0.57
Q2 0.36
Q3 0.77
Q4 0.78

Q1 0.66
Q2 0.80
Q3 0.59
Q4 0.84

The gross profit margin for MEDTRONIC PLC is currently very high, coming in at 72.16%. It has increased from
the same quarter the previous year. Along with this, the net profit margin of 14.69% is above that of the
2014 2015 2016 industry average.
NA = not available NM = not meaningful
Net operating cash flow has increased to $1,773.00 million or 33.71% when compared to the same quarter last
1 Compustat fiscal year convention is used for all fundamental
data items. year. The firm also exceeded the industry average cash flow growth rate of 22.94%.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: July 16, 2017 PAGE 1
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
 July 16, 2017
NYSE: MDT

MEDTRONIC PLC
Sector: Health Care Health Care Equipment Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 7/13/2017
$1.72 1.95% 1.05 $119.3 Billion $69.35-$89.72 $87.81

PEER GROUP ANALYSIS INDUSTRY ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*
The Health Care Equipment & Supplies industry has two main lines of business. One sub-industry supplies
health care equipment to hospitals and patients in outpatient care. The other sub-industry focuses on the
30%

creation of new and more technologically advanced medical equipment to improve the efficiency and
DHR
FA

accuracy of patient care.

VO
RA
BL

EW The industry remained relatively strong throughout the past bear markets and slowly improving economy. As
E

the improvements in the economic backdrop propelled exciting growth in many industries, the Health Care
Equipment & Supplies industry’s performance has been comparatively lackluster. However, the industry
SYK
environment has remained largely positive. There are a couple of main growth factors that have driven this
ZBH industry to perform well. The first and most influential demographic factor for this industry is the increasing
Revenue Growth (TTM)

BSX age of the population. The total elderly population has grown significantly, while “baby boomers” have
shifted into their 60s and 70s.
ABT BCR
UN
FA

Not only is the average life span increasing, but people are also remaining much more active later in life than
VO

in the past. This has expanded demand for many products supplied by this industry ranging from medical
RA

BAX
B

MDT
0%

devices for serious conditions that, more often than not, affect the older population (such as pacemakers and
LE

22% BDX 38% stents) to devices and surgeries that help improve the quality of life (such as joint replacements and laser eye
EBITDA Margin (TTM) surgery).
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies Another factor is the growing demand by patients and doctors alike for improved technology and better
with lower EBITDA margins and revenue growth health care equipment. This has caused health care equipment suppliers to increase their research and
rates. Companies for this scatter plot have a market development expenditures to try to discover more efficient and effective products. One concern for this
capitalization between $23.1 Billion and $119.3 industry is the potential for federal budget cutbacks that would negatively affect those companies receiving
Billion. Companies with NA or NM values do not some form of federal funding. ObamaCare, also known as the Affordable Care Act, adding more patients
appear. covered by health insurance could increase the customer base for this industry.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization. The future of the industry has a positive outlook, due to the continually aging population. The key factors
mentioned above not only indicate the increase in the industry’s clientele, but also show that the Health Care
REVENUE GROWTH AND EARNINGS YIELD Equipment & Supplies industry is actively working towards helping health care facilities improve their ability
to treat this clientele more accurately and efficiently.
30%

DHR
FA

PEER GROUP: Health Care Equipment & Supplies

VO
RA

Recent Market Price/ Net Sales Net Income

BL

EW Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)
E

MDT MEDTRONIC PLC 87.81 119,336 30.38 29,710.00 4,028.00

SYK ABT ABBOTT LABORATORIES 48.08 83,432 54.02 22,303.00 1,503.00
ZBH ISRG DHR DANAHER CORP 84.26 58,487 28.76 17,164.00 2,301.40
Revenue Growth (TTM)

BSX SYK STRYKER CORP 143.20 53,523 32.18 11,785.00 1,689.00

ABT BCR BDX BECTON DICKINSON & CO 197.89 44,991 32.71 12,321.00 1,314.00
UN

BSX BOSTON SCIENTIFIC CORP 27.59 37,782 86.22 8,582.00 435.00

FA
VO

ISRG INTUITIVE SURGICAL INC 938.54 34,577 47.35 2,784.10 779.30

RA

MDT
BAX
B

BAX BAXTER INTERNATIONAL INC 61.30 33,327 18.30 10,263.00 1,857.00

0%

LE

1% BDX 5.5% ZBH ZIMMER BIOMET HOLDINGS INC 128.98 26,008 53.08 7,757.20 496.50
Earnings Yield (TTM) EW EDWARDS LIFESCIENCES CORP 116.03 24,343 38.42 3,149.90 656.70
Companies that exhibit both a high earnings yield BCR BARD (C.R.) INC 318.57 23,132 40.53 3,779.30 593.30
and high revenue growth are generally more The peer group comparison is based on Major Health Care Equipment companies of comparable size.
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between 0.7% and
25.6%. Companies with NA or NM values do not
appear.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: July 16, 2017 PAGE 2
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
 July 16, 2017
NYSE: MDT

MEDTRONIC PLC
Sector: Health Care Health Care Equipment Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 7/13/2017
$1.72 1.95% 1.05 $119.3 Billion $69.35-$89.72 $87.81

COMPANY DESCRIPTION STOCK-AT-A-GLANCE

Medtronic plc manufactures and sells device-based Below is a summary of the major fundamental and technical factors we consider when determining our
medical therapies to hospitals, physicians, clinicians, and overall recommendation of MDT shares. It is provided in order to give you a deeper understanding of our
patients worldwide. The company's Cardiac and Vascular rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
Group segment offers implantable cardiac pacemakers, important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
cardioverter defibrillators, and cardiac resynchronization understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
therapy devices; diagnostics and monitoring devices; valuation. Please refer to our Valuation section on page 5 for further information.
mechanical circulatory support, TYRX, and AF products;
and remote monitoring and patient-centered software. It FACTOR SCORE
also provides transcatheter heart valves, percutaneous
coronary intervention stents, surgical valve replacement Growth out of 5 stars 5.0
and repair products, endovascular stent grafts, peripheral Measures the growth of both the company's income statement and weak strong
vascular products, and products to treat superficial and cash flow. On this factor, MDT has a growth score better than 90% of
deep venous diseases. Its Minimally Invasive Therapies the stocks we rate.
Group segment offers surgical care, wound closure,
electrosurgical, hernia mechanical device, mesh implant,
ablation, interventional lung, ventilator, capnography,
Total Return out of 5 stars 4.5
airway, sensor, monitor, compression, dialysis, enteral Measures the historical price movement of the stock. The stock weak strong
feeding, wound care, and medical surgical products; performance of this company has beaten 80% of the companies we
stapling, vessel sealing, fixation, and hardware cover.
instruments; and gastrointestinal, temperature
management, inhalation therapy, and renal care Efficiency out of 5 stars 3.5
solutions. The company's Restorative Therapies Group Measures the strength and historic growth of a company's return on weak strong
segment offers products for spine, bone graft invested capital. The company has generated more income per dollar of
substitutes, biologic products, trauma, implantable capital than 60% of the companies we review.
neurostimulation therapies, and drug delivery systems
for the treatment of chronic pain, movement disorders,
obsessive-compulsive disorder, overactive bladder,
Price volatility out of 5 stars 5.0
urinary retention, fecal incontinence, and gastroparesis, Measures the volatility of the company's stock price historically. The weak strong
as well as products to treat conditions of the ear, nose, stock is less volatile than 90% of the stocks we monitor.
and throat; and systems that incorporate energy surgical
instruments. It also provides image-guided surgery and Solvency out of 5 stars 5.0
intra-operative imaging systems; and therapies for Measures the solvency of the company based on several ratios. The weak strong
vasculature in and around the brain. The company's company is more solvent than 90% of the companies we analyze.
Diabetes Group segment offers insulin pumps and
consumables, continuous glucose monitoring systems, Income out of 5 stars 4.0
and Web-based therapy management software. The
Measures dividend yield and payouts to shareholders. The company's weak strong
company was founded in 1949 and is headquartered in
dividend is higher than 70% of the companies we track.
Dublin, Ireland.

MEDTRONIC PLC THESTREET RATINGS RESEARCH METHODOLOGY

20 On Hatch
Dublin 2 TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
IRL price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
Phone: 353 1 438 1700 perform against a general benchmark of the equities market and interest rates. While our model is
http://www.medtronic.com quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
Employees: 103000 expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.

Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: July 16, 2017 PAGE 3
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
 July 16, 2017
NYSE: MDT

MEDTRONIC PLC
Sector: Health Care Health Care Equipment Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 7/13/2017
$1.72 1.95% 1.05 $119.3 Billion $69.35-$89.72 $87.81

Consensus EPS Estimates² ($) FINANCIAL ANALYSIS

IBES consensus estimates are provided by Thomson Financial
MEDTRONIC PLC's gross profit margin for the fourth quarter of its fiscal year 2016 is essentially unchanged
when compared to the same period a year ago. The company managed to grow both sales and net income at
a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year
ago. MEDTRONIC PLC has average liquidity. Currently, the Quick Ratio is 1.36 which shows that technically
this company has the ability to cover short-term cash needs. The company's liquidity has decreased from the
same period last year.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing
1.08 4.96 E 5.41 E by 3.39% from the same quarter last year. Together, the key liquidity measurements indicate that it is
Q1 FY17 2018(E) 2019(E) relatively unlikely that the company will face financial difficulties in the near future.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
INCOME STATEMENT next 12-months. To learn more visit www.TheStreetRatings.com.
Q4 FY16 Q4 FY15
Net Sales ($mil) 7,916.00 7,567.00
EBITDA ($mil) 2,680.00 2,494.00
EBIT ($mil) 1,962.00 1,786.00
Net Income ($mil) 1,163.00 1,103.00

BALANCE SHEET
Q4 FY16 Q4 FY15
Cash & Equiv. ($mil) 13,708.00 12,634.00
Total Assets ($mil) 99,816.00 99,782.00
Total Debt ($mil) 33,441.00 31,240.00
Equity ($mil) 50,294.00 52,063.00

PROFITABILITY
Q4 FY16 Q4 FY15
Gross Profit Margin 72.16% 71.75%
EBITDA Margin 33.85% 32.95%
Operating Margin 24.79% 23.60%
Sales Turnover 0.30 0.29
Return on Assets 4.03% 3.54%
Return on Equity 8.00% 6.79%

DEBT
Q4 FY16 Q4 FY15
Current Ratio 1.75 3.29
Debt/Capital 0.40 0.38
Interest Expense 290.00 298.00
Interest Coverage 6.77 5.99

SHARE DATA
Q4 FY16 Q4 FY15
Shares outstanding (mil) 1,369 1,399
Div / share 0.43 0.38
EPS 0.84 0.78
Book value / share 36.73 37.21
Institutional Own % NA NA
Avg Daily Volume 4,218,405 4,644,205
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: July 16, 2017 PAGE 4
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.
 July 16, 2017
NYSE: MDT

MEDTRONIC PLC
Sector: Health Care Health Care Equipment Source: S&P
Annual Dividend Rate Annual Dividend Yield Beta Market Capitalization 52-Week Range Price as of 7/13/2017
$1.72 1.95% 1.05 $119.3 Billion $69.35-$89.72 $87.81

RATINGS HISTORY VALUATION

Our rating for MEDTRONIC PLC has not changed BUY. This stock's P/E ratio indicates a significant discount compared to an average of 44.00 for the Health
since 11/17/2011. As of 7/13/2017, the stock was Care Equipment & Supplies industry and a premium compared to the S&P 500 average of 24.41. To use
trading at a price of $87.81 which is 2.1% below its another comparison, its price-to-book ratio of 2.39 indicates a discount versus the S&P 500 average of 3.04
52-week high of $89.72 and 26.6% above its 52-week and a significant discount versus the industry average of 5.10. The price-to-sales ratio is well above the S&P
low of $69.35. 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria,
MEDTRONIC PLC proves to trade at a discount to investment alternatives within the industry.
2 Year Chart
$90
BUY: $75.17

Price/Earnings 1 2 3 4 5 Price/CashFlow 1 2 3 4 5
premium discount premium discount
$80 MDT 30.38 Peers 44.00 MDT 17.48 Peers 27.97
• Discount. A lower P/E ratio than its peers can • Discount. The P/CF ratio, a stock’s price divided by
$70 signify a less expensive stock or lower growth the company's cash flow from operations, is useful
expectations. for comparing companies with different capital
• MDT is trading at a significant discount to its peers. requirements or financing structures.
2015 2016 • MDT is trading at a significant discount to its peers.

Price/Projected Earnings 1 2 3 4 5 Price to Earnings/Growth 1 2 3 4 5

premium discount premium discount
MOST RECENT RATINGS CHANGES MDT 16.23 Peers 25.23 MDT 0.43 Peers 0.99
Date Price Action From To • Discount. A lower price-to-projected earnings ratio • Discount. The PEG ratio is the stock’s P/E divided
7/13/15 $75.17 No Change Buy Buy than its peers can signify a less expensive stock or by the consensus estimate of long-term earnings
Price reflects the closing price as of the date listed, if available lower future growth expectations. growth. Faster growth can justify higher price
• MDT is trading at a significant discount to its peers. multiples.
• MDT trades at a significant discount to its peers.
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS Price/Book 1 2 3 4 5 Earnings Growth 1 2 3 4 5
(as of 7/13/2017) premium discount lower higher
MDT 2.39 Peers 5.10 MDT 16.53 Peers 114.39
43.81% Buy - We believe that this stock has the • Discount. A lower price-to-book ratio makes a • Lower. Elevated earnings growth rates can lead to
opportunity to appreciate and produce a total return of stock more attractive to investors seeking stocks capital appreciation and justify higher
more than 10% over the next 12 months. with lower market values per dollar of equity on the price-to-earnings ratios.
balance sheet. • However, MDT is expected to significantly trail its
30.69% Hold - We do not believe this stock offers • MDT is trading at a significant discount to its peers. peers on the basis of its earnings growth rate.
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total Price/Sales 1 2 3 4 5 Sales Growth 1 2 3 4 5
return is roughly in balance with the risk of loss. premium discount lower higher
MDT 4.05 Peers 5.18 MDT 3.04 Peers 14.71
25.50% Sell - We believe that this stock is likely to • Discount. In the absence of P/E and P/B multiples, • Lower. A sales growth rate that trails the industry
decline by more than 10% over the next 12 months, with the price-to-sales ratio can display the value implies that a company is losing market share.
the risk involved too great to compensate for any investors are placing on each dollar of sales. • MDT significantly trails its peers on the basis of
possible returns. • MDT is trading at a discount to its industry on this sales growth
measurement.
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via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
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This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy Report Date: July 16, 2017 PAGE 5
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2016. All rights reserved.