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A Look at Stryker’s Financial Performance

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Stryker (SYK) generated revenues of $3.2 billion in the first quarter of 2018 compared with $3.0 billion in the first quarter of 2017. For fiscal 2018 and 2019, the company is expected to generate revenues of $13.6 billion and $14.5 billion, respectively.

The cost of sales incurred by the company also increased from $991 million in the first quarter of 2017 to $1.1 billion in the first quarter of 2018. Its gross profit increased from $2.0 billion in the first quarter of 2017 to $2.1 billion in the first quarter of 2018. As a percentage of sales, its gross profit fell from 66.5% in the first quarter of 2017 to 65.9% in the first quarter of 2018.

Operating expenses

The research and development expenses that Stryker incurred rose by $12 million from $192 million in the first quarter of 2017 to $204 million in the first quarter of 2018. Its selling, general, and administrative expenses increased from $1.1 billion in the first quarter of 2017 to $1.2 billion in the first quarter of 2018. As a percentage of revenues, this was an increase from 37.3% in the first quarter of 2017 to 38.1% in the first quarter of 2018. The amortization on intangible assets also rose from $88 million in Q1 2017 to $102 million in Q1 2018.

On account of the increase in SG&A expenses, the total operating expenses incurred by Stryker rose from $1.4 billion in the first quarter of 2017 to ~$1.6 billion in the first quarter of 2018. As a result, the operating income of the company grew at a slower pace as compared to its gross income from $556 million in Q1 2017 to $591 million in Q1 2018.

Bottom line

Stryker’s net other expenses fell from $57 million in Q1 2017 to $49 million in Q1 2018. The income taxes paid by the company increased from $55 million in Q1 2017 to $99 million in Q1 2018. Consequently, despite the expansion in margins, the net income of the company was relatively stable at $443 million in Q1 2018 as compared with $444 million in Q1 2018, which translated into a net income per share of $1.16 in Q1 2018 as compared with a net income per share of $1.17 in Q1 2017.

In the next part of the series, we’ll take a look at Stryker’s cash flows.

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