Tuesday, December 18, 2012

Stryker (SYK) 2012 Review

Stryker Corp develops, manufactures and markets orthopedic implants for the  hip, knee, trauma, spinal and craniomaxilofacial needs as well as power instruments, endoscopic systems and other operating room devices.  The company has grown profits and dividends at a 20%+ annual rate for the past 10 years earning an 17-19% return on equity.  SYK should maintain this record as a result of:

(1) strong demographic trends, i.e. the a rapidly growing older segment of the population,

(2) an extensive and well diversified product line and will be introducing new knee and hip products in the near future,

(3) an active acquisition program,

(4) strict cost controls,

(5) active stock buyback program.

Negatives:

(1) it is in a highly competitive industry,

(2) there has been pricing pressures in its hip, knee and spine products,

(3) it has recently experienced several product recalls,

(4) its international operations expose it currency fluctuation risks.

SYK is rated A++ by Value Line, has a 12% debt to equity ratio and its stock yields 1.6%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases  
                Yield      Growth Rate     Ratio       Since 2002

SYK           1.6%         10%              20%             9
Ind Ave      1.5              7                 24               NA 

                Debt/                         EPS Down       Net        Value Line
                Equity         ROE      Since 2002      Margin       Rating

SYK           12%           17%           1                18%          A++
Ind Ave       38              20             NA              19             NA

     Chart

            Note: SYK stock made good initial progress off its March 2009 low, though it had difficulty surpassing the downtrend off the December 2007 high (straight red line) and the November 2008 trading high (green line).  Long term the stock is in a trading range (blue lines).  Intermediate term, it is also in a trading range (the purple line is the lower boundary while the top blue line is the upper boundary).  Short term, it is in an uptrend (brown line).  The wiggly red line is the 50 day moving average.  Neither the Dividend Growth or Aggressive Growth Portfolio own shares in SYK.  The upper boundary of its Buy Value Range is $41; the lower boundary of its Sell Half Range is $76.


 
12/12

No comments:

Post a Comment