Stock (Symbol)

Stryker (SYK)

Stock Price

$94

Sector

Healthcare

Data is as of

December 7, 2015

Expected to Report

Jan 26

Company Description

Stryker Corporation is a medical technology company. The Company offers a range of products and services in Orthopaedics, Medical and Surgical, and Neurotechnology and Spine, which help improve patient and hospital outcomes.
Source: Thomson Financial

Sharek’s Take

Stryker (SYK) — a manufacturer of replacement joints, surgical equipment and hospital beds — is expected to have 8% profit growth this year, on 3% sales growth. If it weren’t for the strong dollar profit growth would be 13%. Analysts expect profit growth of 9% long-term, in addition of a yield of 1.6% for an estimated total return of 12% per year. The stock has a P/E of 17 on 2016 profit estimates which I feel is what the stock is worth. SYK is a safe stock, earning Value Line’s top rank of 1 for safety, and has had 35 straight years of sales growth. The company is cash rich with $3 billion in cash and does acquisitions to grow faster. Right now SYK is fairly valued, but is a good stock to buy-and-hold in large conservative growth accounts.

One Year Chart

This stock was hotter last qtr. The P/E was 20 compared to 17 now. I didn’t think SYK was worth 20x earnings, and investors sent the shares lower after SYK reported profits on 10/22. The strong dollar really takes a bite out of stock growth with these multinationals. Even if they grow profits 10%, it’s not enough for hungry investors. So these stocks just meander.

Fair Value

Last qtr I felt SYK was selling for 20x earnings and I felt it worth 17 times earnings. Now its selling at 17x 2016 profit estimates. Yes, that’s 2016. So I don’t see any upside next year.

Bottom Line

Stryker is known for its replacement hips and hospital beds, which are always in demand, giving this stock a high degree of certainty and consistency. Overall the company is growing profits around 10% and you get a 1.6% yield. Those are good numbers. At 17x earnings the stock is fairly valued at this time, but is a solid choice for large trusts as it provides safety, a dividend and long-term growth.