Medtronic (MDT) closed at $97.11, up 2.46 percent, defying a broad market selloff that sent the S&P 500 down 0.31 percent, the Dow off 0.25 percent, and the Nasdaq lower by 1.38 percent.
The medical device company has outperformed its sector handily, posting a 9.84 percent gain over the prior period versus a 2.58 percent rise for the Medical Products industry and 0.87 percent for the S&P 500.
Medtronic's upcoming earnings release should show quarterly EPS of $1.34, a 1.47 percent decline year-over-year, but revenue is forecast at $9.47 billion, up 5.66 percent. For the full fiscal year, consensus estimates call for $5.98 EPS (up 8.14 percent) and $38.97 billion in revenue (up 7.16 percent).
The stock trades at a Forward P/E of 15.86, a meaningful discount to the Medical Products industry's 20.65. However, the PEG ratio of 2.22 sits above the sector average of 2.00, suggesting the growth premium is not cheap.
Medtronic carries a Zacks Rank of #3 (Hold). The Zacks model, which tracks estimate revisions, has produced average annual returns of 25 percent for #1-rated stocks since 1988, but the company's recent 0.04 percent downward EPS revision signals cooling sentiment beneath the headline numbers.
The Medical Products industry holds a Zacks Industry Rank of 153, placing it in the bottom 38 percent of more than 250 sectors. Historically, top-50% ranked industries outperform the bottom half by 2-to-1, a structural headwind for MDT despite near-term earnings tailwinds.
