Medtronic Just Retired 55 Million Shares Without Spending Cash. Is the Stock a Buy?
Medtronic grew revenue by 14% in the first quarter of its fiscal 2027.
Medtronic, a medical devices company, recently completed a spinoff of its diabetes segment, MiniMed, which resulted in the retirement of 55 million shares without any cash expenditure. This move is expected to enhance the company's future net income by distributing it across a smaller number of shares, thereby potentially increasing earnings per share (EPS).
Despite some skepticism among investors regarding the stock's performance, Medtronic has shown resilience with a dividend increase for the 49th consecutive year, reaching a milestone of 50 years, and a trailing cash dividend payout ratio of just under 60%. The company's first-quarter fiscal 2027 revenue increased by nearly 14% year-over-year, driven by its cardiovascular segment, which saw a 19% rise.
The neuroscience and medical surgical segments also reported growth, with 14% and 9% increases, respectively. Medtronic's EPS also increased by 15% year-over-year to $1.45. Although the company's stock trades at a discount compared to its medtech peers, it boasts an earnings yield of 4.2%, outperforming its competitors.
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