Every Tuesday, we update our Bespoke Stock Scores which ranks each of the stocks in the S&P 1500 based on a fundamental, technical, and sentiment score which are then aggregated for an overall score in order to help investors generate ideas for further analysis. One of the top stocks this week was Health Care Equipment and Services company Medtronic (MDT) with a total score of 77.17 (any total score over 70 is considered to be positive). Given a high fundamental score (over 95), the stock has a solid valuation versus its peers and the technicals are also looking good. Currently, MDT has pulled back to oversold levels within the context of its longer-term uptrend which has also given it a ‘good’ timing score in our Trend Analyzer. Having risen 1.2% in today’s session, the stock has already begun to experience some mean reversion.
Additionally, Medtronic (MDT) is attractive as a dividend stock. MDT currently yields 2.67%, which is larger than the average for not only the broader indices but also S&P 1500 Health Care stocks which average a much smaller yield of just 0.5%. MDT’s dividend is comparable to the yields of some other major players within the sector like Merck (MRK) and Amgen (AMGN). One major difference, though, is that MDT has a longer history of growing its payout. MDT has also now raised its dividend every year for the past 42 years; earning it a spot amongst the Dividend Aristocrats. Although the payout ratio of 83.8% and net debt to EBITDA ratio of 1.76 have room for improvement, they do not point to any considerable concern over the company’s ability to continue this dividend growth going forward.
Given we are in the heart of earnings season, Medtronic’s recent earnings history has been another bright spot. Not only has the company reported a triple play in each quarter of 2019, but the stock has seen a positive full day price reaction every quarter since May of 2018 (six consecutive quarters). MDT does not report for another month, but seasonality is on the stock’s side to keep this streak going as the third quarter has historically seen the highest average full-day earnings gain, 1.06%, in response to earnings. Start a two-week free trial to Bespoke Institutional to access our interactive Earnings Explorer, 100 Most Recent Triple Plays, Trend Analyzer, and much more.