Stock Analysis on Net
Stock Analysis on Net

Medtronic PLC (NYSE:MDT)

Capital Asset Pricing Model (CAPM) 

Microsoft Excel

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Medtronic PLC common stock.

Rates of Return

Medtronic PLC, monthly rates of return

Microsoft Excel
Medtronic PLC (MDT) Standard & Poor’s 500 (S&P 500)
t Date PriceMDT,t1 DividendMDT,t1 RMDT,t2 PriceS&P 500,t RS&P 500,t3
May 31, 2019 $92.58 2,752.06
1. Jun 30, 2019 $97.39 5.20% 2,941.76 6.89%
2. Jul 31, 2019 $101.94 $0.54 5.23% 2,980.38 1.31%
3. Aug 31, 2019 $107.89 5.84% 2,926.46 -1.81%
. . . . . . .
. . . . . . .
. . . . . . .
69. Feb 28, 2025 $92.02 1.32% 5,954.50 -1.42%
70. Mar 31, 2025 $89.86 $0.70 -1.59% 5,611.85 -5.75%
Average (R): 0.40% 1.15%
Standard deviation: 6.45% 5.00%
Medtronic PLC (MDT) Standard & Poor’s 500 (S&P 500)
t Date PriceMDT,t1 DividendMDT,t1 RMDT,t2 PriceS&P 500,t RS&P 500,t3
May 31, 2019 $92.58 2,752.06
1. Jun 30, 2019 $97.39 5.20% 2,941.76 6.89%
2. Jul 31, 2019 $101.94 $0.54 5.23% 2,980.38 1.31%
3. Aug 31, 2019 $107.89 5.84% 2,926.46 -1.81%
4. Sep 30, 2019 $108.62 $0.54 1.18% 2,976.74 1.72%
5. Oct 31, 2019 $108.90 0.26% 3,037.56 2.04%
6. Nov 30, 2019 $111.39 2.29% 3,140.98 3.40%
7. Dec 31, 2019 $113.45 $0.54 2.33% 3,230.78 2.86%
8. Jan 31, 2020 $115.44 1.75% 3,225.52 -0.16%
9. Feb 29, 2020 $100.67 -12.79% 2,954.22 -8.41%
10. Mar 31, 2020 $90.18 $0.54 -9.88% 2,584.59 -12.51%
11. Apr 30, 2020 $97.63 8.26% 2,912.43 12.68%
12. May 31, 2020 $98.58 0.97% 3,044.31 4.53%
13. Jun 30, 2020 $91.70 $0.58 -6.39% 3,100.29 1.84%
14. Jul 31, 2020 $96.48 5.21% 3,271.12 5.51%
15. Aug 31, 2020 $107.47 11.39% 3,500.31 7.01%
16. Sep 30, 2020 $103.92 $0.58 -2.76% 3,363.00 -3.92%
17. Oct 31, 2020 $100.57 -3.22% 3,269.96 -2.77%
18. Nov 30, 2020 $113.70 13.06% 3,621.63 10.75%
19. Dec 31, 2020 $117.14 $0.58 3.54% 3,756.07 3.71%
20. Jan 31, 2021 $111.33 -4.96% 3,714.24 -1.11%
21. Feb 28, 2021 $116.97 5.07% 3,811.15 2.61%
22. Mar 31, 2021 $118.13 $0.58 1.49% 3,972.89 4.24%
23. Apr 30, 2021 $130.92 10.83% 4,181.17 5.24%
24. May 31, 2021 $126.59 -3.31% 4,204.11 0.55%
25. Jun 30, 2021 $124.13 $0.63 -1.45% 4,297.50 2.22%
26. Jul 31, 2021 $131.31 5.78% 4,395.26 2.27%
27. Aug 31, 2021 $133.48 1.65% 4,522.68 2.90%
28. Sep 30, 2021 $125.35 $0.63 -5.62% 4,307.54 -4.76%
29. Oct 31, 2021 $119.86 -4.38% 4,605.38 6.91%
30. Nov 30, 2021 $106.70 -10.98% 4,567.00 -0.83%
31. Dec 31, 2021 $103.45 $0.63 -2.46% 4,766.18 4.36%
32. Jan 31, 2022 $103.49 0.04% 4,515.55 -5.26%
33. Feb 28, 2022 $104.99 1.45% 4,373.94 -3.14%
34. Mar 31, 2022 $110.95 $0.63 6.28% 4,530.41 3.58%
35. Apr 30, 2022 $104.36 -5.94% 4,131.93 -8.80%
36. May 31, 2022 $100.15 -4.03% 4,132.15 0.01%
37. Jun 30, 2022 $89.75 $0.68 -9.71% 3,785.38 -8.39%
38. Jul 31, 2022 $92.52 3.09% 4,130.29 9.11%
39. Aug 31, 2022 $87.92 -4.97% 3,955.00 -4.24%
40. Sep 30, 2022 $80.75 $0.68 -7.38% 3,585.62 -9.34%
41. Oct 31, 2022 $87.34 8.16% 3,871.98 7.99%
42. Nov 30, 2022 $79.04 -9.50% 4,080.11 5.38%
43. Dec 31, 2022 $77.72 $0.68 -0.81% 3,839.50 -5.90%
44. Jan 31, 2023 $83.69 7.68% 4,076.60 6.18%
45. Feb 28, 2023 $82.80 -1.06% 3,970.15 -2.61%
46. Mar 31, 2023 $80.62 $0.68 -1.81% 4,109.31 3.51%
47. Apr 30, 2023 $90.95 12.81% 4,169.48 1.46%
48. May 31, 2023 $82.76 -9.00% 4,179.83 0.25%
49. Jun 30, 2023 $88.10 $0.69 7.29% 4,376.86 4.71%
50. Jul 31, 2023 $87.76 -0.39% 4,588.96 4.85%
51. Aug 31, 2023 $81.50 -7.13% 4,507.66 -1.77%
52. Sep 30, 2023 $78.36 $0.69 -3.01% 4,288.05 -4.87%
53. Oct 31, 2023 $70.56 -9.95% 4,193.80 -2.20%
54. Nov 30, 2023 $79.27 12.34% 4,567.80 8.92%
55. Dec 31, 2023 $82.38 $0.69 4.79% 4,769.83 4.42%
56. Jan 31, 2024 $87.54 6.26% 4,845.65 1.59%
57. Feb 29, 2024 $83.36 -4.77% 5,096.27 5.17%
58. Mar 31, 2024 $87.15 $0.69 5.37% 5,254.35 3.10%
59. Apr 30, 2024 $80.24 -7.93% 5,035.69 -4.16%
60. May 31, 2024 $81.37 1.41% 5,277.51 4.80%
61. Jun 30, 2024 $78.71 $0.70 -2.41% 5,460.48 3.47%
62. Jul 31, 2024 $80.32 2.05% 5,522.30 1.13%
63. Aug 31, 2024 $88.58 10.28% 5,648.40 2.28%
64. Sep 30, 2024 $90.03 $0.70 2.43% 5,762.48 2.02%
65. Oct 31, 2024 $89.25 -0.87% 5,705.45 -0.99%
66. Nov 30, 2024 $86.54 -3.04% 6,032.38 5.73%
67. Dec 31, 2024 $79.88 $0.70 -6.89% 5,881.63 -2.50%
68. Jan 31, 2025 $90.82 13.70% 6,040.53 2.70%
69. Feb 28, 2025 $92.02 1.32% 5,954.50 -1.42%
70. Mar 31, 2025 $89.86 $0.70 -1.59% 5,611.85 -5.75%
Average (R): 0.40% 1.15%
Standard deviation: 6.45% 5.00%

Show all

1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of MDT during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t

Variance and Covariance

Medtronic PLC, calculation of variance and covariance of returns

Microsoft Excel
t Date RMDT,t RS&P 500,t (RMDT,t–RMDT)2 (RS&P 500,t–RS&P 500)2 (RMDT,t–RMDT)×(RS&P 500,t–RS&P 500)
1. Jun 30, 2019 5.20% 6.89% 23.04 33.02 27.58
2. Jul 31, 2019 5.23% 1.31% 23.34 0.03 0.80
3. Aug 31, 2019 5.84% -1.81% 29.61 8.74 -16.09
. . . . . . .
. . . . . . .
. . . . . . .
69. Feb 28, 2025 1.32% -1.42% 0.86 6.61 -2.38
70. Mar 31, 2025 -1.59% -5.75% 3.93 47.63 13.68
Total (Σ): 2,874.69 1,727.94 1,387.95
t Date RMDT,t RS&P 500,t (RMDT,t–RMDT)2 (RS&P 500,t–RS&P 500)2 (RMDT,t–RMDT)×(RS&P 500,t–RS&P 500)
1. Jun 30, 2019 5.20% 6.89% 23.04 33.02 27.58
2. Jul 31, 2019 5.23% 1.31% 23.34 0.03 0.80
3. Aug 31, 2019 5.84% -1.81% 29.61 8.74 -16.09
4. Sep 30, 2019 1.18% 1.72% 0.61 0.33 0.45
5. Oct 31, 2019 0.26% 2.04% 0.02 0.80 -0.12
6. Nov 30, 2019 2.29% 3.40% 3.58 5.10 4.27
7. Dec 31, 2019 2.33% 2.86% 3.76 2.93 3.32
8. Jan 31, 2020 1.75% -0.16% 1.85 1.72 -1.78
9. Feb 29, 2020 -12.79% -8.41% 173.97 91.36 126.07
10. Mar 31, 2020 -9.88% -12.51% 105.66 186.57 140.40
11. Apr 30, 2020 8.26% 12.68% 61.87 133.11 90.75
12. May 31, 2020 0.97% 4.53% 0.33 11.43 1.95
13. Jun 30, 2020 -6.39% 1.84% 46.05 0.48 -4.69
14. Jul 31, 2020 5.21% 5.51% 23.21 19.04 21.02
15. Aug 31, 2020 11.39% 7.01% 120.91 34.33 64.43
16. Sep 30, 2020 -2.76% -3.92% 9.98 25.70 16.01
17. Oct 31, 2020 -3.22% -2.77% 13.10 15.32 14.16
18. Nov 30, 2020 13.06% 10.75% 160.28 92.30 121.63
19. Dec 31, 2020 3.54% 3.71% 9.86 6.58 8.06
20. Jan 31, 2021 -4.96% -1.11% 28.68 5.11 12.11
21. Feb 28, 2021 5.07% 2.61% 21.82 2.14 6.83
22. Mar 31, 2021 1.49% 4.24% 1.19 9.59 3.38
23. Apr 30, 2021 10.83% 5.24% 108.82 16.77 42.72
24. May 31, 2021 -3.31% 0.55% 13.71 0.36 2.22
25. Jun 30, 2021 -1.45% 2.22% 3.39 1.15 -1.98
26. Jul 31, 2021 5.78% 2.27% 29.04 1.27 6.08
27. Aug 31, 2021 1.65% 2.90% 1.58 3.07 2.20
28. Sep 30, 2021 -5.62% -4.76% 36.17 34.86 35.51
29. Oct 31, 2021 -4.38% 6.91% 22.80 33.26 -27.54
30. Nov 30, 2021 -10.98% -0.83% 129.38 3.92 22.53
31. Dec 31, 2021 -2.46% 4.36% 8.13 10.33 -9.16
32. Jan 31, 2022 0.04% -5.26% 0.13 41.03 2.28
33. Feb 28, 2022 1.45% -3.14% 1.11 18.35 -4.52
34. Mar 31, 2022 6.28% 3.58% 34.59 5.91 14.29
35. Apr 30, 2022 -5.94% -8.80% 40.13 98.86 62.99
36. May 31, 2022 -4.03% 0.01% 19.62 1.30 5.06
37. Jun 30, 2022 -9.71% -8.39% 102.02 90.99 96.35
38. Jul 31, 2022 3.09% 9.11% 7.24 63.43 21.43
39. Aug 31, 2022 -4.97% -4.24% 28.81 29.06 28.93
40. Sep 30, 2022 -7.38% -9.34% 60.48 109.97 81.55
41. Oct 31, 2022 8.16% 7.99% 60.31 46.78 53.11
42. Nov 30, 2022 -9.50% 5.38% 97.98 17.88 -41.85
43. Dec 31, 2022 -0.81% -5.90% 1.45 49.62 8.49
44. Jan 31, 2023 7.68% 6.18% 53.09 25.28 36.64
45. Feb 28, 2023 -1.06% -2.61% 2.13 14.13 5.48
46. Mar 31, 2023 -1.81% 3.51% 4.87 5.56 -5.20
47. Apr 30, 2023 12.81% 1.46% 154.20 0.10 3.94
48. May 31, 2023 -9.00% 0.25% 88.36 0.81 8.45
49. Jun 30, 2023 7.29% 4.71% 47.48 12.72 24.58
50. Jul 31, 2023 -0.39% 4.85% 0.61 13.68 -2.89
51. Aug 31, 2023 -7.13% -1.77% 56.68 8.52 21.97
52. Sep 30, 2023 -3.01% -4.87% 11.57 36.23 20.47
53. Oct 31, 2023 -9.95% -2.20% 107.11 11.19 34.62
54. Nov 30, 2023 12.34% 8.92% 142.77 60.39 92.85
55. Dec 31, 2023 4.79% 4.42% 19.35 10.73 14.41
56. Jan 31, 2024 6.26% 1.59% 34.44 0.20 2.60
57. Feb 29, 2024 -4.77% 5.17% 26.73 16.20 -20.81
58. Mar 31, 2024 5.37% 3.10% 24.79 3.82 9.73
59. Apr 30, 2024 -7.93% -4.16% 69.29 28.18 44.19
60. May 31, 2024 1.41% 4.80% 1.03 13.36 3.70
61. Jun 30, 2024 -2.41% 3.47% 7.86 5.38 -6.50
62. Jul 31, 2024 2.05% 1.13% 2.72 0.00 -0.02
63. Aug 31, 2024 10.28% 2.28% 97.78 1.29 11.24
64. Sep 30, 2024 2.43% 2.02% 4.13 0.76 1.77
65. Oct 31, 2024 -0.87% -0.99% 1.59 4.57 2.70
66. Nov 30, 2024 -3.04% 5.73% 11.78 21.00 -15.73
67. Dec 31, 2024 -6.89% -2.50% 53.03 13.29 26.55
68. Jan 31, 2025 13.70% 2.70% 176.90 2.42 20.68
69. Feb 28, 2025 1.32% -1.42% 0.86 6.61 -2.38
70. Mar 31, 2025 -1.59% -5.75% 3.93 47.63 13.68
Total (Σ): 2,874.69 1,727.94 1,387.95

Show all

VarianceMDT = Σ(RMDT,t–RMDT)2 ÷ (70 – 1)
= 2,874.69 ÷ (70 – 1)
= 41.66

VarianceS&P 500 = Σ(RS&P 500,t–RS&P 500)2 ÷ (70 – 1)
= 1,727.94 ÷ (70 – 1)
= 25.04

CovarianceMDT, S&P 500 = Σ(RMDT,t–RMDT)×(RS&P 500,t–RS&P 500) ÷ (70 – 1)
= 1,387.95 ÷ (70 – 1)
= 20.12

Systematic Risk (β) Estimation

Microsoft Excel
VarianceMDT 41.66
VarianceS&P 500 25.04
CovarianceMDT, S&P 500 20.12
Correlation coefficientMDT, S&P 5001 0.62
βMDT2 0.80
αMDT3 -0.53%

Calculations

1 Correlation coefficientMDT, S&P 500
= CovarianceMDT, S&P 500 ÷ (Standard deviationMDT × Standard deviationS&P 500)
= 20.12 ÷ (6.45% × 5.00%)
= 0.62

2 βMDT
= CovarianceMDT, S&P 500 ÷ VarianceS&P 500
= 20.12 ÷ 25.04
= 0.80

3 αMDT
= AverageMDT – βMDT × AverageS&P 500
= 0.40% – 0.80 × 1.15%
= -0.53%

Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.85%
Expected rate of return on market portfolio2 E(RM) 14.71%
Systematic risk (β) of Medtronic PLC common stock βMDT 0.80
 
Expected rate of return on Medtronic PLC common stock3 E(RMDT) 12.77%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(RMDT) = RF + βMDT [E(RM) – RF]
= 4.85% + 0.80 [14.71% – 4.85%]
= 12.77%