The 10-second takeaway
For the quarter ended Oct. 26 (Q2), Medtronic beat slightly on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped slightly and GAAP earnings per share contracted significantly.
Margins dropped across the board.
Medtronic booked revenue of $4.10 billion. The 22 analysts polled by S&P Capital IQ wanted to see a top line of $4.05 billion on the same basis. GAAP reported sales were 1.8% higher than the prior-year quarter's $4.02 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.88. The 25 earnings estimates compiled by S&P Capital IQ predicted $0.88 per share. GAAP EPS of $0.63 for Q2 were 23% lower than the prior-year quarter's $0.82 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.)
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 75.1%, 100 basis points worse than the prior-year quarter. Operating margin was 28.2%, 30 basis points worse than the prior-year quarter. Net margin was 15.8%, 590 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $4.03 billion. On the bottom line, the average EPS estimate is $0.89.
Next year's average estimate for revenue is $16.52 billion. The average EPS estimate is $3.65.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 1,704 members out of 1,795 rating the stock outperform, and 91 members rating it underperform. Among 488 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 473 give Medtronic a green thumbs-up, and 15 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Medtronic is outperform, with an average price target of $45.20.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Medtronic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.