Just What the Doctors Ordered – Stryker Corp.
Stryker Corp. [NYSE:SYK] Nov. 25, 2008 close: $37.34
52-week range: $35.38 - $76.89
Yield = $0.33 or 0.884%
In dicey markets like the present one you often get chances to buy the very best companies for historically incredible valuations. Stryker has an outstanding track record of growth in both sales and earnings. In fact, the latest Value Line data [November 28 issue] shows record revenues, cash flow, book value and EPS in each year since at least 1992.
Even better, the balance sheet showed cash assets of over $2.2 billion versus total debt of just $21.2 million as of September 30 this year. The credit crisis will pose no problems for this wonderful growth company.
Stryker manufactures and markets orthopedic implants and medical/surgical equipment letting it avoid the problems caused by the recessionary environment. When you need a new hip, knee or facial implant you don’t put it off like you would an optional vacation or shopping spree.
Here are the last 9 years of per share data [as reported by Value Line]:
Year….Sales…...…CF..…..EPS….....Div.….Book Val….Avg. P/E
2000 …5.84 …... 0.84…. 0.55 .…. 0.04 ….. 2.18 ……… 37.1x
2001 …6.61 …... 1.13 … 0.67 .…. 0.04 ….. 2.68 ……… 40.3x
2002 …7.60 …... 1.37 … 0.88 ….. 0.05 ….. 3.78 ……… 33.0x
2003 …9.08 …... 1.71 … 1.12 ….. 0.06 ….. 5.40 ……… 32.4x
2004 ..10.59 ….. 2.08 … 1.43 …. 0.07 ….. 6.84 ……… 33.0x
2005 ..12.02 ….. 2.49 … 1.75 …. 0.09 ….. 8.03 ……… 27.7x
2006 .. 13.25 …. 2.85 … 2.02 …. 0.11 ….. 10.27 ….…. 23.6x
2007 .. 14.60 …. 3.33 … 2.40 …. 0.22 ….. 13.09 …….. 27.9x
2008 .. 17.10 …. 3.95 … 2.88 …. 0.33 ….. 14.70 …….. 19.5x
2009 consensus estimate for EPS is now running $3.35 making the forward P/E a remarkably low 11.15x versus SYK’s 10-year median P/E of 32.
EPS grew from $0.55 to $2.88 or plus 423% over the past eight years.
Dividend growth was 725% over the same period.
These shares traded at much higher multiples even during past bear markets.
At the low in 1998 SYK was still 20.6x that year’s EPS. At the 2001 nadir it was 32.4x and right at the low in the fall of 2002 in commanded 24.9x trailing earnings.
A return to even 20 times 2009 expectations leads to a target price of $67 or up $29.66 [ + 79.4% ] from today’s close. Is that reasonable? SYK traded at $76.90 last year and as high as $74.90 in 2008.
Except for the past couple of weeks Stryker shares are now below their lows since the first half of 2003 when EPS were less than half today’s level.
Value Line gives this company an ‘A’ for financial strength, an above average safety rating, and a top 1 percent ranking for earnings predictability.
They note that SYK shares have outperformed 85% of all stocks in the 1700 company Value Line database over the past decade.
Disclosure: Author bought SYK shares today.
Stryker Corp. [NYSE:SYK] Nov. 25, 2008 close: $37.34
52-week range: $35.38 - $76.89
Yield = $0.33 or 0.884%
In dicey markets like the present one you often get chances to buy the very best companies for historically incredible valuations. Stryker has an outstanding track record of growth in both sales and earnings. In fact, the latest Value Line data [November 28 issue] shows record revenues, cash flow, book value and EPS in each year since at least 1992.
Even better, the balance sheet showed cash assets of over $2.2 billion versus total debt of just $21.2 million as of September 30 this year. The credit crisis will pose no problems for this wonderful growth company.
Stryker manufactures and markets orthopedic implants and medical/surgical equipment letting it avoid the problems caused by the recessionary environment. When you need a new hip, knee or facial implant you don’t put it off like you would an optional vacation or shopping spree.
Here are the last 9 years of per share data [as reported by Value Line]:
Year….Sales…...…CF..…..EPS….....Div.….Book Val….Avg. P/E
2000 …5.84 …... 0.84…. 0.55 .…. 0.04 ….. 2.18 ……… 37.1x
2001 …6.61 …... 1.13 … 0.67 .…. 0.04 ….. 2.68 ……… 40.3x
2002 …7.60 …... 1.37 … 0.88 ….. 0.05 ….. 3.78 ……… 33.0x
2003 …9.08 …... 1.71 … 1.12 ….. 0.06 ….. 5.40 ……… 32.4x
2004 ..10.59 ….. 2.08 … 1.43 …. 0.07 ….. 6.84 ……… 33.0x
2005 ..12.02 ….. 2.49 … 1.75 …. 0.09 ….. 8.03 ……… 27.7x
2006 .. 13.25 …. 2.85 … 2.02 …. 0.11 ….. 10.27 ….…. 23.6x
2007 .. 14.60 …. 3.33 … 2.40 …. 0.22 ….. 13.09 …….. 27.9x
2008 .. 17.10 …. 3.95 … 2.88 …. 0.33 ….. 14.70 …….. 19.5x
2009 consensus estimate for EPS is now running $3.35 making the forward P/E a remarkably low 11.15x versus SYK’s 10-year median P/E of 32.
EPS grew from $0.55 to $2.88 or plus 423% over the past eight years.
Dividend growth was 725% over the same period.
These shares traded at much higher multiples even during past bear markets.
At the low in 1998 SYK was still 20.6x that year’s EPS. At the 2001 nadir it was 32.4x and right at the low in the fall of 2002 in commanded 24.9x trailing earnings.
A return to even 20 times 2009 expectations leads to a target price of $67 or up $29.66 [ + 79.4% ] from today’s close. Is that reasonable? SYK traded at $76.90 last year and as high as $74.90 in 2008.
Except for the past couple of weeks Stryker shares are now below their lows since the first half of 2003 when EPS were less than half today’s level.
Value Line gives this company an ‘A’ for financial strength, an above average safety rating, and a top 1 percent ranking for earnings predictability.
They note that SYK shares have outperformed 85% of all stocks in the 1700 company Value Line database over the past decade.
Disclosure: Author bought SYK shares today.
