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3Q Results 2014

A couple of days back we received results from one of our recommended healthcare stocks in the US, Stryker. These results were for the 3rd quarter of 2014. This table does many jobs for me. It shows you sales growth, geographic spread and the sales mix between their three main categories, Reconstructive, Medsurg and Neurotechnology and Spine.



So lets try and summarise that for you. Net sales increased 11.1% for the quarter. 10.2% of that increase was due to increased unit volume while 3.4% was due to acquisitions. Changes in price and currency fluctuations had a negative impact on sales. About 32% of sales comes from outside of the US. Expanding internationally is a big growth theme for the business having just built new headquarters in Europe.

Amongst the divisions Reconstruction has the biggest sales (42%). This includes knee and hip replacements as well as Trauma. Medsurg is the production and sales of medical instruments and is responsible for 40% of sales. Neurotechnology and Spine concludes the sales mix with 18%.

Net earnings per share decreased by 40% to 0.16c. The company had a tough period with product recalls. However on an adjusted basis which excludes these once offs, earnings per share increased 10.6% to $1.15. Earnings for the full year are expected to come in at around $4.75. Trading at $81 or 17 times 2014 earnings the stock is not expensive. I came across this article which goes through quite a detailed fundamental analysis. It's titled Stryker Seriously Undervalued at Current Prices. Give it a read, it makes some interesting points about Stryker's great performance compared to their competitors.

As you already know we are big fans of the sector. Not only do Stryker benefit from an ageing population, they also benefit from an overweight population, 2 things that many developed nations are faced with. Being a market leader and clearly a very well managed business we continue to recommend Stryker as a great way to benefit from the healthcare theme.


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