Where Will Medtronic Stock Be In 4 Years?


  • It often takes several years for the prices of overvalued or undervalued stocks to reflect today’s earnings-based valuations.
  • But usually, once we get out into the 3-5 year time frame, the correlation between earnings trends and stock prices get stronger.
  • In this article, I use a simple earnings valuation technique to estimate approximately where Medtronic’s stock price will be 4 years from now if those trends hold.
  • I will compare those estimated returns to the S&P 500 index and cash’s expected returns to determine whether to rate Medtronic a buy, sell, or hold.

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In the immortal words of Bob Dylan, “Times They Are A-Changin'”. After a nearly 40-year run of steadily falling interest rates, a “sea change” is occurring, and interest rates are now rising. Successful investors will need to adapt to this change. While we

Data by YCharts

Medtronic's historical earnings trend

FAST Graphs

Data by YCharts

Medtronic Earnings Estimates

FAST Graphs

Year Earnings for Year Cumulative Earnings


$6.34 $6.34
2 $6.46 $12.80
3 $6.58 $19.39
4 $6.70 $26.09
5 $6.83 $32.92
6 $6.96 $39.88
7 $7.09 $46.97
8 $7.22 $54.19
9 $7.36 $61.55
10 $7.49 $69.04
Total $69.04 $100 + $69.04 = $69.04

4-Year No Mean Reversion 4-year total return expectation

4-year return expectation minus SPY’s +27.48%

4-year return expectation minus TFLO +17.00%

MDT +23.37% -4.11% +6.37%

With a Generic 7% 10-year Mean Reversion Assumption 4-year total return expectation 4-year return expectation minus SPY’s +13.62% 4-year return expectation minus TFLO’s +17.00%
MDT -4.93% -18.55% -21.93%

Disclosure: I/we have a beneficial long position in the shares of TFLO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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