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Medtronic (MDT) Down 2.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Medtronic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Medtronic Q3 Earnings Top, Revenues Match Estimates
Medtronic reported third-quarter fiscal 2021 adjusted earnings per share of $1.29, beating the Zacks Consensus Estimate by 12.2%. Adjusted earnings however plunged 10.4% year over year. Currency-adjusted earnings per share came in at $1.35 for the quarter.
Without certain one-time adjustments — including restructuring, acquisition, amortization expenses and certain litigation charges — GAAP earnings per share was 94 cents, reflecting a 33.8% decline from the year-ago reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.78 billion, down 1% on an organic basis (excluding the impacts of currency) but up 0.8% on a reported basis. The top line matched the Zacks Consensus Estimate.
In the quarter under review, U.S. sales (51% of total revenues) declined 2% year over year on a reported basis (same on an organic basis) to $3.94 billion. Non-U.S. developed market revenues totaled $2.52 billion (32% of total revenues), depicting a 6.1% improvement on a reported basis (down 0.2% on an organic basis).
Emerging market revenues (17% of total revenues) amounted to $1.31 billion, up 0.3% on a reported basis (up 0.8% organically).
Segment Details
In the fiscal third quarter, CVG revenues declined 5.9% at CER to $2.71 billion, reflecting the impact of the COVID-19 resurgence on procedure volumes in late December and January. CRHF sales totaled $1.37 billion, down 3.7% year over year at CER. Revenues from CSH were down 9.5% at CER to $873 million. APV revenues were down 5% at CER to $463 million.
In MITG, worldwide sales totaled $2.31 billion, marking a 4.6% year-over-year improvement at CER. Increased demand for COVID-19 related diagnostics and therapies was offset by the impact of the COVID-19 resurgence on procedure volumes in late December and January. Surgical Innovations declined 5.3% while RGR registered an improvement of 25.4% both at CER.
In RTG, worldwide revenues of $2.13 billion were down 0.8% year over year at CER, impacted by pandemic-led decline in procedure volumes. Cranial and Spinal Technologies reported 4.5% drop at CER. Sales in Specialty Therapies improved 3.2% while Neuromodulation were up 3.4% year over year at CER. Revenues at the Diabetes group increased 0.8% at CER to $630 million.
Margins
Gross margin in the reported quarter contracted 261 basis points (bps) to 66.3% on a 3.1% decline in gross profit to $5.15 billion. Adjusted operating margin contracted 202 bps year over year to 25.9%. Selling, general and administrative expenses fell 1.9% to $2.54 billion, while research and development expenses increased 4.9% to $601 million.
Guidance
Due to the uncertainty spurred by the COVID-19 pandemic, this time too, Medtronic has decided not to provide any annual or quarterly financial guidance.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Medtronic has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Medtronic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Medtronic (MDT) Down 2.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Medtronic (MDT - Free Report) . Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Medtronic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Medtronic Q3 Earnings Top, Revenues Match Estimates
Medtronic reported third-quarter fiscal 2021 adjusted earnings per share of $1.29, beating the Zacks Consensus Estimate by 12.2%. Adjusted earnings however plunged 10.4% year over year. Currency-adjusted earnings per share came in at $1.35 for the quarter.
Without certain one-time adjustments — including restructuring, acquisition, amortization expenses and certain litigation charges — GAAP earnings per share was 94 cents, reflecting a 33.8% decline from the year-ago reported figure.
Total Revenues
Worldwide revenues in the reported quarter grossed $7.78 billion, down 1% on an organic basis (excluding the impacts of currency) but up 0.8% on a reported basis. The top line matched the Zacks Consensus Estimate.
In the quarter under review, U.S. sales (51% of total revenues) declined 2% year over year on a reported basis (same on an organic basis) to $3.94 billion. Non-U.S. developed market revenues totaled $2.52 billion (32% of total revenues), depicting a 6.1% improvement on a reported basis (down 0.2% on an organic basis).
Emerging market revenues (17% of total revenues) amounted to $1.31 billion, up 0.3% on a reported basis (up 0.8% organically).
Segment Details
In the fiscal third quarter, CVG revenues declined 5.9% at CER to $2.71 billion, reflecting the impact of the COVID-19 resurgence on procedure volumes in late December and January. CRHF sales totaled $1.37 billion, down 3.7% year over year at CER. Revenues from CSH were down 9.5% at CER to $873 million. APV revenues were down 5% at CER to $463 million.
In MITG, worldwide sales totaled $2.31 billion, marking a 4.6% year-over-year improvement at CER. Increased demand for COVID-19 related diagnostics and therapies was offset by the impact of the COVID-19 resurgence on procedure volumes in late December and January. Surgical Innovations declined 5.3% while RGR registered an improvement of 25.4% both at CER.
In RTG, worldwide revenues of $2.13 billion were down 0.8% year over year at CER, impacted by pandemic-led decline in procedure volumes. Cranial and Spinal Technologies reported 4.5% drop at CER. Sales in Specialty Therapies improved 3.2% while Neuromodulation were up 3.4% year over year at CER.
Revenues at the Diabetes group increased 0.8% at CER to $630 million.
Margins
Gross margin in the reported quarter contracted 261 basis points (bps) to 66.3% on a 3.1% decline in gross profit to $5.15 billion. Adjusted operating margin contracted 202 bps year over year to 25.9%. Selling, general and administrative expenses fell 1.9% to $2.54 billion, while research and development expenses increased 4.9% to $601 million.
Guidance
Due to the uncertainty spurred by the COVID-19 pandemic, this time too, Medtronic has decided not to provide any annual or quarterly financial guidance.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Medtronic has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Medtronic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.