STJ  St. Jude Medical Inc.

Exchange

NYSE

Sector

Health Care

Industry

Biotechnology: Electromedical & Electrotherapeutic Apparatus

Market Cap.

23.09B

Vuru Grade

63.43/100

Current Price

$80.82
+0.00 (+0.00%)

Growth Price

$42.65
Overvalued by 47.23%

Stability Price

$7.52
Overvalued by 90.70%

Company Metrics

  • P/E 35.43
  • P/S 3.87
  • P/B 5.14
  • EPS 2.28
  • Cash ROIC 13.51%
  • Cash Ratio 0.27
  • Dividend 1.24 / 1.54 %
  • Avg. Vol. 2.63M
  • Shares 285.70M
  • Market Cap. 23.09B

Company Description

St. Jude Medical, Inc. develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. It operates in four segments: Cardiac Rhythm Management, Cardiovascular, Atrial Fibrillation, and Neuromodulation. The Cardiac Rhythm Management segment offers products for cardiac arrhythmias, or irregular heart beats. Its products include tachycardia implantab... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Abbott's $30 billion deal for St. Jude Medical not seen as job killer
Minneapolis Star Tribune - Apr 28, 2016
Company executives gave no indication that the transition will trigger an outflow of the 3,000 jobs St. Jude has in Minnesota.
Abbott to Buy St. Jude Medical in Deal Valued at About $25 Billion - Bloomberg
Carson Block Takes on St. Jude Medical Claiming Hack Risk
Bloomberg - Aug 25, 2016
Carson Block, the renowned short-seller and founder of research firm Muddy Waters LLC, has taken a short position in St. Jude Medical Inc., denouncing the security of its cardiac devices in an effort that could derail the company's purchase by Abbott ...
St. Jude Medical drops after Muddy Water findings of 'negligent product design' - CNBC
St. Jude Medical Warns of Battery Problems With Heart Products
Wall Street Journal - Oct 11, 2016
St. Jude Medical Inc. warned Tuesday that a battery malfunction could cause hundreds of thousands of its implanted heart defibrillators to quickly lose power and stop functioning.
Two deaths spark recall of St. Jude heart devices - Reuters
St. Jude Warns Defibrillator Patients About Battery Risks - Bloomberg
Short seller Muddy Waters renews claims of St. Jude Medical cyber vulnerabilities
MarketWatch - Oct 19, 2016
Short seller Muddy Waters Capital, which holds a short position in St. Jude Medical Inc., claimed Wednesday for the second time that the medical device maker's implantable cardiac devices are vulnerable to cyberattack.
New cybersecurity allegations emerge as St. Jude Medical reports mixed ... - Minneapolis Star Tribune
St. Jude Medical (STJ) Misses Q3 Earnings, Withdraws View - Zacks.com
Abbott Labs closes its acquisition of St. Jude Medical
Minneapolis Star Tribune - Jan 4, 2017
Abbott Laboratories released no new details Wednesday about integration timelines and personnel changes in Minnesota as it completed its long-planned acquisition of Little Canada-based medical device company St. Jude Medical. The cash-and-stock ...
Abbott (ABT) Completes Acquisition of St. Jude Medical (STJ) - StreetInsider.com
St. Jude's $25 billion sale to Abbott closes - Minneapolis / St. Paul Business Journal
Hired experts back claims St. Jude heart devices can be hacked
Reuters - Oct 24, 2016
Short-selling firm Muddy Waters said in a legal filing on Monday that outside experts it hired validated its claims that St. Jude Medical Inc cardiac implants are vulnerable to potentially life-threatening cyber attacks. U.S. regulators responded by ...
Muddy Waters Fights St. Jude Lawsuit Over Pacemaker Reports - Bloomberg
Hired experts support claims St. Jude heart devices can be hacked - Fox News
St. Jude hits back at short-seller's cyberattack claims (Video)
Minneapolis / St. Paul Business Journal - Aug 29, 2016
St. Jude Medical Inc. is defending itself against charges by a research firm that its devices are vulnerable to hackers, calling the report "false and misleading.
St. Jude Medical, Inc. (STJ): Still Non-Secure – Muddy Waters - ValueWalk
Study finds flaws in criticism of St. Jude cyber security - Reuters
Federated Investors Inc. PA Sells 2896 Shares of St Jude Medical Inc (STJ)
Chaffey Breeze - Mar 28, 2017
St Jude Medical logo Federated Investors Inc. PA decreased its position in shares of St Jude Medical Inc (NYSE:STJ) by 43.4% during the fourth quarter, according to its most recent 13F filing with the SEC.
Thrivent Financial for Lutherans Purchases 610 Shares of St Jude Medical Inc (STJ) - Community Financial News
St. Jude Medical (STJ) Michael Rousseau on Q3 2016 Results - Earnings Call ...
Seeking Alpha - Oct 19, 2016
Welcome to the St. Jude Medical third quarter 2016 earnings conference call. Hosting the call today is ... During this call, the company may use non-GAAP financial measures to provide information pertinent to ongoing business performance. Investors ...
St. Jude Medical Sues Short Seller Over Device Allegations
Wall Street Journal - Sep 7, 2016
St. Jude Medical Inc. on Wednesday filed a lawsuit against Muddy Waters Capital LLC, claiming the research firm intentionally made false and misleading claims about its heart devices in order to profit from a decline in its stock.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for STJ to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate STJ's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$80.82 Current Price

$42.65 Growth Price (DCF)

Overvalued by 47.23%


Growth Rate Assumed by Market: 30.19%


Future Free Cash Flow Growth Rate: 9.9%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$7.52 Stability Price (EPV)

Overvalued by 90.70%


Discount Rate: 15.0%

$59.10 Book Price

Overvalued by 26.87%


Satisfactory Cash Return on Invested Capital over the past 5 years

STJ has somewhat efficiently invested its financial resources in buildings, projects, and equipment. If CROIC is inconsistent, it's likely STJ could be benefiting from a one-time event or has a mixed history of investing capital productively. Read the company's Annual Report to determine whether this can improve.

STJ has created $13.51 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 980.35M 1.06B 739.00M 1.11B 853.00M
divided by
Invested Capital 6.96B 6.30B 7.50B 6.10B 9.92B
Cash ROIC 14.09% 16.74% 9.86% 18.27% 8.60%

Excellent Return on Equity over the past 5 years

Over the past 5 years, STJ has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

STJ has generated $19.47 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 825.79M 752.00M 692.00M 955.00M 866.00M
divided by
Stockholders' Equity 4.47B 4.09B 4.23B 4.20B 4.04B
Return on Equity 18.46% 18.37% 16.36% 22.74% 21.43%

Excellent Business Performance over the past 10 years

STJ has been able to maintain profitability in good times and bad. This could mean STJ has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

STJ has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Free Cash Flow 380.92M 578.41M 601.68M 542.47M 969.47M 980.35M 1.06B 739.00M 1.11B 853.00M

Weak Balance Sheet

STJ's financial position is not ideal. The key is to check whether STJ is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Cash 79.89M 389.09M 136.44M 392.93M 500.34M 985.81M 1.19B 1.37B 1.44B 667.00M
Current Assets 1.69B 2.13B 2.08B 2.56B 2.91B 3.39B 3.55B 3.91B 3.91B 3.27B
Total Assets 4.79B 5.33B 5.72B 6.43B 8.57B 9.01B 9.27B 10.25B 10.21B 13.06B
Current Liabilities 676.21M 1.85B 1.03B 1.07B 1.02B 1.06B 1.78B 1.38B 2.67B 2.47B
Total Liabilities 1.82B 2.40B 2.49B 3.10B 4.19B 4.53B 5.18B 6.02B 6.01B 9.02B
Stockholder' Equity 2.97B 2.93B 3.24B 3.32B 4.37B 4.47B 4.09B 4.23B 4.20B 4.04B
Current Ratio 2.50 1.15 2.02 2.40 2.86 3.19 2.00 2.83 1.47 1.32
TL-to-TA 0.38 0.45 0.43 0.48 0.49 0.50 0.56 0.59 0.59 0.69

Consistent Reinvestment of Profits over the past 10 years

STJ has consistently retained profits. This may put STJ in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, STJ can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Retained Earnings 2.79B 2.60B 2.98B 3.19B 4.10B 4.38B 4.02B 3.94B 4.23B 4.21B
Retained Earnings Growth - -6.68% 14.48% 7.17% 28.44% 6.96% -8.35% -2.04% 7.34% -0.33%

Potential Competitive Advantage over the past 10 years

STJ potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$14.80 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 548.25M 559.04M 384.33M 777.23M 907.44M 825.79M 752.00M 692.00M 955.00M 866.00M
divided by
Revenue 3.30B 3.78B 4.36B 4.68B 5.16B 5.61B 5.50B 5.50B 5.62B 5.54B
Net Profit Margin 16.60% 14.79% 8.81% 16.60% 17.57% 14.72% 13.67% 12.58% 16.99% 15.63%

Strong Pricing Power over the past 10 years

STJ has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$71.91 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Gross Profit 2.39B 2.74B 3.19B 3.43B 3.75B 4.08B 3.97B 3.93B 3.97B 3.80B
divided by
Revenue 3.30B 3.78B 4.36B 4.68B 5.16B 5.61B 5.50B 5.50B 5.62B 5.54B
Gross Margin 72.34% 72.44% 73.17% 73.23% 72.70% 72.70% 72.05% 71.39% 70.60% 68.51%

Medium Capital Intensity over the past 10 years

STJ has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

41.31% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Capital Expenditure 267.90M 287.16M 343.91M 326.41M 304.90M 306.49M 280.00M 222.00M 190.00M 186.00M
divided by
Net Income 548.25M 559.04M 384.33M 777.23M 907.44M 825.79M 752.00M 692.00M 955.00M 866.00M
Capital Expenditure Ratio 48.86% 51.37% 89.48% 42.00% 33.60% 37.12% 37.23% 32.08% 19.90% 21.48%

No Dividend History over the past 10 years

STJ has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 372.83M 352.44M 349.72M 344.36M 330.49M 327.09M 314.80M 290.60M 289.70M 286.30M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 35.83 40.25 31.76 36.29 42.00 34.30 35.47 61.94 66.20 62.22
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

STJ has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Shares Outstanding 372.83M 352.44M 349.72M 344.36M 330.49M 327.09M 314.80M 290.60M 289.70M 286.30M
Stock Bought Back - 5.78% 0.78% 1.56% 4.20% 1.04% 3.91% 8.33% 0.31% 1.19%
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