Stock Analysis on Net

Medtronic PLC (NYSE:MDT)

Analysis of Income Taxes

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Income Tax Expense (Benefit)

Medtronic PLC, income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
U.S. 287  151  579  2,899  614  440 
International 439  375  406  796  840  835 
Current tax expense 726  526  985  3,695  1,454  1,275 
U.S. (626) (138) (310) 45  (399) (67)
International 165  (1,139) (128) (1,160) (477) (410)
Deferred tax expense (benefit) (461) (1,277) (438) (1,115) (876) (477)
Income tax provision (benefit) 265  (751) 547  2,580  578  798 

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

Item Description The company
Current tax expense Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Medtronic PLC current tax expense decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.
Deferred tax expense (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Medtronic PLC deferred tax expense (benefit) decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.
Income tax provision (benefit) Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Medtronic PLC income tax provision (benefit) decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Effective Income Tax Rate (EITR)

Medtronic PLC, effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
U.S. federal statutory tax rate 21.00% 21.00% 21.00% 30.50% 35.00% 35.00%
U.S. state taxes, net of federal tax benefit -1.10% 0.50% 0.90% 0.80% 1.00% 0.90%
Research and development credit -2.30% -2.10% -1.20% -0.80% -0.90% -1.20%
Puerto Rico Excise Tax -2.00% -1.50% -1.60% -1.10% -1.50% -1.60%
International -12.60% -10.00% -10.70% -18.90% -27.90% -23.40%
Stock based compensation -0.80% -1.50% -1.00% -1.00% 0.00% 0.00%
Other, net 0.90% 0.40% -0.50% 1.60% -1.00% 8.70%
Interest on uncertain tax positions 0.90% 1.30% 0.90% 1.40% 0.00% 0.00%
Base Erosion Anti-Abuse Tax 0.50% 2.60% 0.10% 0.00% 0.00% 0.00%
Foreign Derived Intangible Income Benefit -1.90% -1.20% -0.60% 0.00% 0.00% 0.00%
Divestiture-related 0.00% 0.00% -0.40% -3.80% 0.00% 0.00%
Certain tax adjustments -1.00% -30.80% -0.60% -8.90% 4.40% 0.00%
Legal entity restructuring 1.80% 0.00% 0.00% 0.00% 0.00% 0.00%
U.S. tax on foreign earnings 3.40% 2.80% 4.00% 2.70% 3.50% 0.00%
Increase (decrease) in tax rate -14.20% -39.50% -10.70% -28.00% -22.40% -16.60%
Effective tax rate, before U.S. Tax Reform 6.80% -18.50% 10.30% 2.50% 12.60% 18.40%
U.S. Tax Reform 0.00% 0.00% 0.20% 43.00% 0.00% 0.00%
Effective tax rate 6.80% -18.50% 10.50% 45.50% 12.60% 18.40%

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

Item Description The company
Effective tax rate, before U.S. Tax Reform Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Medtronic PLC effective tax rate, before U.S. Tax Reform decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

Components of Deferred Tax Assets and Liabilities

Medtronic PLC, components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
Net operating loss, capital loss, and credit carryforwards 6,114  6,432  6,574  7,463  6,800  7,568 
Capitalization of research and development 408  —  —  —  —  — 
Other accrued liabilities 442  390  389  410  658  619 
Accrued compensation 411  285  315  209  427  358 
Pension and post-retirement benefits 234  350  300  256  456  530 
Stock-based compensation 132  136  162  190  278  316 
Inventory 164  191  194  207  277  225 
Lease obligations 106  101  —  —  —  — 
Federal and state benefit on uncertain tax positions 55  96  83  67  191  308 
Interest limitation 352  236  111  —  —  — 
Unrealized loss on available-for-sale securities and derivative financial instruments —  —  17  93  —  107 
Other 336  338  339  332  308  341 
Gross deferred tax assets 8,754  8,555  8,484  9,227  9,395  10,372 
Valuation allowance (5,822) (5,482) (6,300) (7,166) (6,311) (7,032)
Deferred tax assets 2,932  3,073  2,184  2,061  3,084  3,340 
Intangible assets (320) (1,017) (1,614) (1,697) (4,943) (5,173)
Basis impairment —  —  —  —  —  (230)
Realized loss on derivative financial instruments (75) (65) (70) (69) (112) (112)
Right of use leases (102) (97) —  —  —  — 
Unrealized gain on available-for-sale securities and derivative financial instruments (16) (12) —  —  (18) — 
Accumulated depreciation (151) (87) (38) (38) (149) (189)
Outside basis difference of subsidiaries (101) (77) (119) (131) (112) — 
Other (81) (110) (152) (143) (74) (179)
Deferred tax liabilities (846) (1,465) (1,993) (2,078) (5,408) (5,883)
Net deferred tax assets (liabilities) 2,086  1,608  191  (17) (2,324) (2,543)
Prepaid income taxes 458  449  363  406  475  365 
Income tax receivables 353  381  335  315  218  529 
Tax assets (liabilities), net 2,897  2,438  889  704  (1,631) (1,649)

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

Item Description The company
Gross deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Medtronic PLC gross deferred tax assets increased from 2019 to 2020 and from 2020 to 2021.
Deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Medtronic PLC deferred tax assets increased from 2019 to 2020 but then slightly decreased from 2020 to 2021.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Medtronic PLC net deferred tax assets (liabilities) increased from 2019 to 2020 and from 2020 to 2021.

Deferred Tax Assets and Liabilities, Classification

Medtronic PLC, deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
Other current assets 756  780  648  662  545  697 
Tax assets 3,169  2,832  1,519  1,465  1,509  1,383 
Less: Prepaid income taxes (458) (449) (363) (406) (475) (365)
Less: Income tax receivables (353) (381) (335) (315) (218) (529)
Deferred tax assets 3,114  2,782  1,469  1,406  1,361  1,186 
Deferred tax liabilities 1,028  1,174  1,278  1,423  2,978  3,729 
Deferred tax liabilities (included in Noncurrent liabilities held for sale) —  —  —  —  707  — 

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Medtronic PLC deferred tax assets increased from 2019 to 2020 and from 2020 to 2021.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Medtronic PLC deferred tax liabilities decreased from 2019 to 2020 and from 2020 to 2021.

Adjustments to Financial Statements: Removal of Deferred Taxes

Medtronic PLC, adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
Adjustment to Total Assets
Total assets (as reported) 93,083  90,689  89,694  91,393  99,816  99,782 
Less: Noncurrent deferred tax assets, net 3,114  2,782  1,469  1,406  1,361  1,186 
Total assets (adjusted) 89,969  87,907  88,225  89,987  98,455  98,596 
Adjustment to Total Liabilities
Total liabilities (as reported) 41,481  39,817  39,482  40,571  49,400  47,719 
Less: Noncurrent deferred tax liabilities, net 1,028  1,174  1,278  1,423  2,978  3,729 
Total liabilities (adjusted) 40,453  38,643  38,204  39,148  46,422  43,990 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 51,428  50,737  50,091  50,720  50,294  52,063 
Less: Net deferred tax assets (liabilities) 2,086  1,608  191  (17) (2,324) (2,543)
Shareholders’ equity (adjusted) 49,342  49,129  49,900  50,737  52,618  54,606 
Adjustment to Net Income Attributable To Medtronic
Net income attributable to Medtronic (as reported) 3,606  4,789  4,631  3,104  4,028  3,538 
Add: Deferred income tax expense (benefit) (461) (1,277) (438) (1,115) (876) (477)
Net income attributable to Medtronic (adjusted) 3,145  3,512  4,193  1,989  3,152  3,061 

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).


Medtronic PLC, Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Medtronic PLC, adjusted financial ratios

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Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
Net Profit Margin
Reported net profit margin 11.97% 16.56% 15.16% 10.36% 13.56% 12.27%
Adjusted net profit margin 10.44% 12.15% 13.72% 6.64% 10.61% 10.62%
Total Asset Turnover
Reported total asset turnover 0.32 0.32 0.34 0.33 0.30 0.29
Adjusted total asset turnover 0.33 0.33 0.35 0.33 0.30 0.29
Financial Leverage
Reported financial leverage 1.81 1.79 1.79 1.80 1.98 1.92
Adjusted financial leverage 1.82 1.79 1.77 1.77 1.87 1.81
Return on Equity (ROE)
Reported ROE 7.01% 9.44% 9.25% 6.12% 8.01% 6.80%
Adjusted ROE 6.37% 7.15% 8.40% 3.92% 5.99% 5.61%
Return on Assets (ROA)
Reported ROA 3.87% 5.28% 5.16% 3.40% 4.04% 3.55%
Adjusted ROA 3.50% 4.00% 4.75% 2.21% 3.20% 3.10%

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Medtronic PLC adjusted net profit margin ratio deteriorated from 2019 to 2020 and from 2020 to 2021.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Medtronic PLC adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Medtronic PLC adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Medtronic PLC adjusted ROE deteriorated from 2019 to 2020 and from 2020 to 2021.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Medtronic PLC adjusted ROA deteriorated from 2019 to 2020 and from 2020 to 2021.

Medtronic PLC, Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Medtronic 3,606  4,789  4,631  3,104  4,028  3,538 
Net sales 30,117  28,913  30,557  29,953  29,710  28,833 
Profitability Ratio
Net profit margin1 11.97% 16.56% 15.16% 10.36% 13.56% 12.27%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Medtronic 3,145  3,512  4,193  1,989  3,152  3,061 
Net sales 30,117  28,913  30,557  29,953  29,710  28,833 
Profitability Ratio
Adjusted net profit margin2 10.44% 12.15% 13.72% 6.64% 10.61% 10.62%

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

2021 Calculations

1 Net profit margin = 100 × Net income attributable to Medtronic ÷ Net sales
= 100 × 3,606 ÷ 30,117 = 11.97%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Medtronic ÷ Net sales
= 100 × 3,145 ÷ 30,117 = 10.44%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Medtronic PLC adjusted net profit margin ratio deteriorated from 2019 to 2020 and from 2020 to 2021.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net sales 30,117  28,913  30,557  29,953  29,710  28,833 
Total assets 93,083  90,689  89,694  91,393  99,816  99,782 
Activity Ratio
Total asset turnover1 0.32 0.32 0.34 0.33 0.30 0.29
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales 30,117  28,913  30,557  29,953  29,710  28,833 
Adjusted total assets 89,969  87,907  88,225  89,987  98,455  98,596 
Activity Ratio
Adjusted total asset turnover2 0.33 0.33 0.35 0.33 0.30 0.29

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

2021 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 30,117 ÷ 93,083 = 0.32

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 30,117 ÷ 89,969 = 0.33

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Medtronic PLC adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 93,083  90,689  89,694  91,393  99,816  99,782 
Shareholders’ equity 51,428  50,737  50,091  50,720  50,294  52,063 
Solvency Ratio
Financial leverage1 1.81 1.79 1.79 1.80 1.98 1.92
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 89,969  87,907  88,225  89,987  98,455  98,596 
Adjusted shareholders’ equity 49,342  49,129  49,900  50,737  52,618  54,606 
Solvency Ratio
Adjusted financial leverage2 1.82 1.79 1.77 1.77 1.87 1.81

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

2021 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 93,083 ÷ 51,428 = 1.81

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 89,969 ÷ 49,342 = 1.82

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Medtronic PLC adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Medtronic 3,606  4,789  4,631  3,104  4,028  3,538 
Shareholders’ equity 51,428  50,737  50,091  50,720  50,294  52,063 
Profitability Ratio
ROE1 7.01% 9.44% 9.25% 6.12% 8.01% 6.80%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Medtronic 3,145  3,512  4,193  1,989  3,152  3,061 
Adjusted shareholders’ equity 49,342  49,129  49,900  50,737  52,618  54,606 
Profitability Ratio
Adjusted ROE2 6.37% 7.15% 8.40% 3.92% 5.99% 5.61%

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

2021 Calculations

1 ROE = 100 × Net income attributable to Medtronic ÷ Shareholders’ equity
= 100 × 3,606 ÷ 51,428 = 7.01%

2 Adjusted ROE = 100 × Adjusted net income attributable to Medtronic ÷ Adjusted shareholders’ equity
= 100 × 3,145 ÷ 49,342 = 6.37%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Medtronic PLC adjusted ROE deteriorated from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Apr 30, 2021 Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Medtronic 3,606  4,789  4,631  3,104  4,028  3,538 
Total assets 93,083  90,689  89,694  91,393  99,816  99,782 
Profitability Ratio
ROA1 3.87% 5.28% 5.16% 3.40% 4.04% 3.55%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Medtronic 3,145  3,512  4,193  1,989  3,152  3,061 
Adjusted total assets 89,969  87,907  88,225  89,987  98,455  98,596 
Profitability Ratio
Adjusted ROA2 3.50% 4.00% 4.75% 2.21% 3.20% 3.10%

Based on: 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24), 10-K (reporting date: 2019-04-26), 10-K (reporting date: 2018-04-27), 10-K (reporting date: 2017-04-28), 10-K (reporting date: 2016-04-29).

2021 Calculations

1 ROA = 100 × Net income attributable to Medtronic ÷ Total assets
= 100 × 3,606 ÷ 93,083 = 3.87%

2 Adjusted ROA = 100 × Adjusted net income attributable to Medtronic ÷ Adjusted total assets
= 100 × 3,145 ÷ 89,969 = 3.50%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Medtronic PLC adjusted ROA deteriorated from 2019 to 2020 and from 2020 to 2021.