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Discussing Stryker’s Latest Valuation

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Aug. 25 2016, Updated 7:04 a.m. ET

Valuation multiples

After the release of its 2Q16 earnings results on July 21, 2016, Stryker (SYK) was trading at a forward PE (price-to-earnings) multiple of 18.6x–19.1x. As of August 23, 2016, it was trading at a forward PE multiple of 18.7x, higher than Medtronic (MDT) and Zimmer Biomet (ZBH) and lower than Becton, Dickinson and Company (BDX).

Those interested in investing in Stryker can consider the SPDR S&P 500 Growth ETF (SPYG). Stryker accounts for 0.23% of SPYG’s total holdings.

The above graph shows a comparison of the forward PE multiples of Stryker and its peers. The forward PE ratio is a measure of a company’s growth. It’s calculated by dividing a company’s current stock price by its earnings estimate for the next year.

Due to Stryker’s leading market position, new product launches, diversified product portfolio, strategic mergers and acquisitions, and company-wide transformation initiatives, its valuation has witnessed a gradual rise.

To learn more about the company’s fundamentals and business structure, you can read A Must-Read Company Overview of Stryker.

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Stryker’s share price movement

Stryker’s stock was trading at $114.1 on August 22, 2016. It has a 50-day moving average of $117.7 and a 200-day moving average of $110.6. On July 15, 2016, Stryker was trading at a 52-week high of $123.5. The stock traded at a 52-week low of $86.7 on January 11, 2016.

The company’s share price has fallen by ~8.2% since the release of its 2Q16 earnings on July 21, 2016. The fall in the stock’s price was triggered by the company’s weak 3Q16 guidance, though its 2Q16 earnings and revenue exceeded analysts’ estimates as well as its own.

Stryker’s stock has returned ~14.8% over the last 12 months. It has outperformed the Market represented by the S&P 500 Index. Its year-to-date returns stand at ~21.1%, while the index has returned ~5.8% during the same period.

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