In times of economic uncertainty, the medical device manufacturers can offer calm amidst the storm. Covidien PLC (COV) has steadily grown its earnings during the recession and is now expected to have double digit earnings growth in both 2011 and 2012. This Zacks #1 Rank (strong buy) is trading at just 14x forward estimates.
Covidien is headquartered in Ireland and manufactures health care products in 3 segments: Medical Devices, Pharmaceuticals and Medical Supplies. The company has sales in 140 countries worldwide.
Covidien Beat By 17.3% in Q1
On Feb 1, Covidien reported fiscal first quarter 2011 results and surprised on the Zacks Consensus by 14 cents. Earnings per share were 95 cents compared to the consensus of 81 cents.
It was the 7th consecutive earnings beat. The company has only missed once since 2007.
Sales rose 5% to $2.8 billion from $2.6 billion a year ago. The quarter was boosted by an 11% gain to $1.9 billion in the Medical Devices segment. Both Pharmaceuticals and Medical Supplies sales fell, however, 8% and 5%, respectively.
Gross margins rose to a record 56.7% from 55.2% in the first quarter of last year.
Zacks Consensus Estimates Rise
In just the last 7 days, the fiscal 2011 Zacks Consensus Estimate has risen by a penny to $3.76 per share. This is expected earnings growth of 11.2%.
3 estimates have moved higher in the last week for fiscal 2012, pushing that consensus estimate up a penny as well to $4.14 per share. That is earnings growth of 10.3%.
The price-to-consensus chart since 2007 shows the steady gains in earnings, along with the share price.
COV Has Attractive Fundamentals
In addition to having a value P/E, Covidien has a price-to-book ratio of 2.8, which is within the value parameters of under 3.0.
It also has a stellar 1-year return on equity (ROE) of 19.9%.
Covidien rewards shareholders by re-purchasing 2.3 million shares in the first quarter. It also pays a dividend with a current yield of 1.5%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
COVIDIEN PLC (COV): Free Stock Analysis Report
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