Stryker 1Q 2016 numbers

22-APR-16

Stryker reported numbers two evenings back. Here goes: Stryker reports first quarter 2016 results. Over here at Vestact we are not big ones for knowing where consensus is, and second guessing how the stock price will react. Often the stock price reacts in a very different way to what you think, anyhow. As we often try and get across, you are the owner of the business. The share price represents what the relative prospects are, on all the news available and that you know, as well as projections, as priced by the collective market. If the market perceives the earnings trajectory to be sharply higher, you can bet your bottom Dollar that the stock will trade on a much higher multiple relative to the rest of the market.

Stryker has three businesses, Medical & Surgical, Reconstructive and Neurotechnology & Spine. Two months back we wrote about the full year numbers: Stryker 4Q and full year results, as you can see, the business is a very North American and very US centric one. Eddy Elfenbein points out in his Friday morning weekly email that the worst of the Dollar strength seems past the company and that obviously their raising guidance has been a positive for the stock price. The company is expecting 5.65 to 5.80 Dollars worth of earnings for the current year, meaning that the stock at the top end of the range trades at 18.8 times earnings, 19.3 times at the lower end of the earnings range. Whilst that hardly seems cheap for a company that is growing earnings in the middle single digits, we really think that the sector is one that is poised for another strong growth spurt.

As we pointed out in the end of year results, the company will continue to add to patient safety in medical centres, making sure that minimal accidents happen, thereby improving efficiencies and improving productivity. We continue to accumulate the stock at current levels, it is a very attractive business to own in a future where more medical surgeries will become commonplace, knees, hips and the like will be simple procedures, even more so than today.