Wednesday, August 21, 2013

Medtronic Earnings Call

The Chump portfolio maintains a full position in medical device maker Medtronic (MDT).  The price of the stock has reached "fair value" based on FAST Graphs, so I trimmed the position a bit late last week on strength.

Earnings were announced this week and stock dropped a bit;  revenue was at the low end of the range forecasted, and eps were right on target.  I'll hold the full position until the stock gets overvalued.

Here is a highlight from the earnings call, which can be found here:

"Over the next five years, we expect to generate over $25 billion of free cash flow. We remain committed to returning 50% of this to our shareholders through dividends and share repurchases, a commitment level we believe is appropriate given our current mix of U.S. and international free cash flow. We are constrained by U.S tax policy which creates a negative incentive for us to repatriate cash to the U.S. the remaining 50% gives us the flexibility to make the necessary investments for sustainable growth. We continue to be very disciplined in how we deploy our capital with a strong focus on returns. As we have said in the past, we expect any M&A transaction to surpass our mid-teens risk-adjusted hurdle rate and we do not expect these investments to be dilutive to shareholder EPS growth expectations."



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