Stryker is a leading medical technology company in the world. The company offers innovative products and services in orthopaedics, medical and surgical, and neurotechnology and spine segments. It is a leader in creating products that make surgery more efficient, reduce trauma and improve techniques.
The company operates through Medical and Surgical (44% of 2018 sales), Orthopaedics (37%), and Neurotechnology and Spine (19%) segments. Stryker enjoys No.1 market position in medical, instruments and sustainable solutions. Its products include implants used in joint replacement and trauma surgeries; surgical equipment and surgical navigation systems; patient handling, emergency medical equipment, and intensive care disposable products; and spinal devices; as well as other products used in a variety of medical specialties. The company has 23 company-owned and 273 leased locations worldwide including 43 manufacturing locations.
Stryker has a large geographic footprint extending to the U.S. (more than 70% of total sales), developed markets (~20%) and emerging markets (less than 10%). The company’s products are sold in over 80 countries through company-owned subsidiaries and branches, as well as third-party dealers and distributors. The company reported higher sales growth in markets other than the U.S. in the last year.Investment Data
- Opportunity Score: 71
- Ticker: NYSE:SYK
- Sector: Healthcare
- Industry: Medical Devices
- Market Cap: 60.94B
- P/E: 29.72
- Dividend Yield: 1.41
- Dividend Payout Ratio: 41.97
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
Revenue Growth & Market Exposure
Stryker surpassed $13 billion in sales for the first time, recording its 39th consecutive year of sales growth in 2018. The company’s impressive innovation pipeline continues to be a strong growth driver. Stryker spent 6.3% of sales on research and development in the last year. The company launched two new products, Neuroform Atlas Stent System in Neurovascular and the Trident II Acetabular System in Joint Replacement in the last year. The company owns more than 3,000 U.S. patents and over 4,700 international patents which is its leading competitive advantage.
Stryker enjoys large market shares in most of the medical disciplines it serves. It offers a complete portfolio of implants and systems designed to provide surgeons with multiple options to treat patients with orthopaedic problems. Its Mako technology has more than twelve years of robotic-arm assisted surgery experience and has been used in more than 150,000 procedures to date. Stryker is a trusted supplier of choice for more than 3,000 US hospitals, doctors and other healthcare facilities.
The company intends to develop strong customer focus through business unit specialization and innovative, quality products and collaboration. Acquisitions have also played a major role in Stryker’s sales growth contributing ~1.9% in the last year. Some of the significant acquisitions made in the last year included K2M, Entellus, Invuity, HyperBranch, and Hygia.
Stryker continues to make good progress on its multi-year effort to systematically reduce costs. The company has a strong focus on driving sales growth in core and adjacent markets. Stryker has grown its revenue at a rate of 7.3% CAGR in the last decade. Going forward, Stryker should continue to grow sales at the high end of the medical technology industry. It is targeting FY2019 net sales growth to range between 7.5% and 8%.
Stryker Corporation is a Dividend Achiever. The company has an average annual dividend yield of 1% and a very low dividend payout ratio of 22.7%. Stryker last raised its dividend payout by more than 10%. The company invested $2,451 million in acquisitions, paid $703 million in dividends and used $300 million for share repurchases in the last year. It sports an impressive dividend growth rate of 17% CAGR over the last decade. Earnings have also compounded at ~30% CAGR in the last five years.
Stryker has a successful M&A track record. The company’s strategy to enhance its portfolio’s depth and breadth with strategic mergers and acquisitions also continue to bear fruit. These acquisitions have enhanced Stryker’s product portfolio and geographic reach. Stryker’s recent acquisition of Wright Medical which is a leader in the extremities and biologics markets further strengthens its position in the fastest growing segments of orthopaedics, expected to grow at a rate of 8% CAGR. Stryker’s strategy of pursuing category leadership in core markets should further strengthen its market share.
Stryker has committed to increasing its dividend payout at or above EPS growth. The company is expecting its FY2019 adjusted EPS to range between $8.20 and $8.25. A low payout ratio signifies considerable room for future dividend growth.
Stryker faces heavy competition from both local and global companies. It is one of the five leading global companies in Neurotechnology, instruments, and Spine. Major competitors in Neurotechnology are Medtronics, Johnson & Johnson, Terumo Corporation and Penumbra. In Spine segment, Stryker faces competition from Medtronic Sofamor Danek, DePuy Synthes, Nuvasive, and Globus Medical. In medical and instruments, Stryker competes with Zimmer, Medtronic, Johnson & Johnson and ConMed Linvatec, HillRom Holdings, Inc., Zoll Medical Corporation, Medline Industries, and Koninklijke Philips.
|Ticker||Company||Sector||Industry||Score||Quote||Market Cap||PE||FPE||EPS||Yield||Payout Ratio||Payments||Dividend||Chowder||Ambassador||Achiever||Aristocrat||King||Graph|
|JNJ||Johnson & Johnson||Healthcare||Drug Manufacturers||70||132.95||350.66||23.62||23.62||5.63||2.86||67.50||4||3.80||9.12||NO||YES||YES||YES||1|
|UNH||UnitedHealth Group Incorporated||Healthcare||Health Care Plans||77||251.28||238.36||17.54||17.54||14.33||1.72||30.15||4||4.32||24.26||NO||NO||NO||NO||1|
|MRK||Merck & Co., Inc.||Healthcare||Drug Manufacturers||63||77.00||195.17||19.93||19.93||3.86||3.17||63.21||4||2.44||5.90||NO||NO||NO||NO||1|
|PFE||Pfizer Inc.||Healthcare||Drug Manufacturers||59||32.67||181.24||11.63||11.63||2.81||4.65||54.09||4||1.52||5.26||NO||NO||NO||NO||1|
|ABT||Abbott Laboratories||Healthcare||Medical Devices||47||79.32||139.98||39.24||39.24||2.02||1.82||71.29||4||1.44||-0.99||NO||YES||YES||NO||1|
|BMY||Bristol Myers Squibb Co.||Healthcare||Drug Manufacturers||50||54.43||123.08||27.08||27.08||2.01||3.31||89.55||4||1.80||1.42||NO||NO||NO||NO||1|
|AMGN||Amgen Inc.||Healthcare||Drug Manufacturers||62||208.48||122.96||16.19||16.19||12.88||3.07||49.69||4||6.40||21.73||NO||NO||NO||NO||1|
|TMO||Thermo Fisher Scientific Inc||Healthcare||Medical Diagnostics & Research||40||284.96||113.65||31.00||31.00||9.19||0.31||9.58||4||0.88||2.84||NO||NO||NO||NO||1|
|ABBV||AbbVie Inc||Healthcare||Drug Manufacturers||65||75.24||111.21||14.24||14.24||5.28||6.27||89.39||4||4.72||6.25||NO||NO||YES||NO||1|
|DHR||Danaher Corporation||Healthcare||Medical Diagnostics & Research||48||141.27||98.14||42.56||42.56||3.31||0.51||21.75||4||0.72||6.34||NO||NO||NO||NO||1|
|GILD||Gilead Sciences Inc.||Healthcare||Drug Manufacturers||42||75.93||95.60||18.00||18.00||4.22||3.58||64.45||4||2.72||3.58||NO||NO||NO||NO||1|
|CVS||CVS Health Corporation||Healthcare||Health Care Plans||72||59.73||77.88||11.74||11.74||5.08||3.35||39.37||4||2.00||15.97||NO||YES||NO||NO||1|
|SYK||Stryker Corporation||Healthcare||Medical Devices||71||162.59||60.94||29.72||29.72||5.48||1.41||41.97||4||2.30||12.32||NO||YES||NO||NO||1|
|BDX||Becton Dickinson & Co||Healthcare||Medical Instruments & Equipment||60||223.32||60.43||80.60||80.60||2.77||1.42||114.08||4||3.16||9.14||YES||YES||YES||NO||1|
|ANTM||Anthem Inc.||Healthcare||Health Care Plans||53||230.93||58.37||12.49||12.49||18.47||1.65||20.57||4||3.80||7.91||NO||NO||NO||NO||1|
|ABC||AmerisourceBergen Corporation||Healthcare||Medical Distribution||71||88.36||18.15||28.59||28.59||3.08||1.90||54.55||4||1.68||11.33||YES||YES||NO||NO||1|
|CAH||Cardinal Health Inc||Healthcare||Medical Distribution||59||48.32||14.15||0.00||0.00||-14.24||3.98||100.00||4||1.92||13.60||YES||YES||YES||NO||1|
|PRGO||Perrigo Company plc||Healthcare||Drug Manufacturers||66||49.04||6.64||45.60||45.60||1.07||1.84||84.11||4||0.90||16.41||YES||YES||NO||NO||1|
Stryker Corporation is one of the top companies in the various medical disciplines it serves. Strategic acquisitions targeted towards further strengthening its leadership in core as well as new markets and proven track record of successful integrations should support future growth. Evidence-based products and services, strong R&D base, a large presence in key markets, and continuous efforts towards reducing costs and expanding margins should continue optimizing shareholder value in the future.
DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.