Stock Analysis on Net
Stock Analysis on Net

Medtronic PLC (NYSE:MDT)

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Medtronic PLC, free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 12.07%
01 FCFF0 6,036
1 FCFF1 6,091 = 6,036 × (1 + 0.91%) 5,435
2 FCFF2 6,244 = 6,091 × (1 + 2.51%) 4,971
3 FCFF3 6,500 = 6,244 × (1 + 4.11%) 4,618
4 FCFF4 6,871 = 6,500 × (1 + 5.71%) 4,356
5 FCFF5 7,373 = 6,871 × (1 + 7.30%) 4,170
5 Terminal value (TV5) 165,967 = 7,373 × (1 + 7.30%) ÷ (12.07% – 7.30%) 93,881
Intrinsic value of Medtronic PLC capital 117,431
Less: Debt (fair value) 25,382
Intrinsic value of Medtronic PLC common stock 92,049
 
Intrinsic value of Medtronic PLC common stock (per share) $71.96
Current share price $86.38

Based on: 10-K (reporting date: 2026-04-24).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Medtronic PLC, cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 110,492 0.81 14.29%
Debt (fair value) 25,382 0.19 2.41% = 2.92% × (1 – 17.63%)

Based on: 10-K (reporting date: 2026-04-24).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 1,279,137,890 × $86.38
= $110,491,930,938.20

   Debt (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (21.20% + 16.60% + 23.40% + 29.50% + 8.30% + 6.80%) ÷ 6
= 17.63%

WACC = 12.07%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Medtronic PLC, PRAT model

Microsoft Excel
Average Apr 24, 2026 Apr 25, 2025 Apr 26, 2024 Apr 28, 2023 Apr 29, 2022 Apr 30, 2021
Selected Financial Data (US$ in millions)
Interest expense, net 715 729 719 636 553 925
Net income attributable to Medtronic 4,801 4,662 3,676 3,758 5,039 3,606
 
Effective income tax rate (EITR)1 21.20% 16.60% 23.40% 29.50% 8.30% 6.80%
 
Interest expense, net, after tax2 563 608 551 448 507 862
Add: Dividends to shareholders 3,639 3,589 3,666 3,616 3,383 3,120
Interest expense (after tax) and dividends 4,202 4,197 4,217 4,064 3,890 3,982
 
EBIT(1 – EITR)3 5,364 5,270 4,227 4,206 5,546 4,468
 
Current debt obligations 1,788 2,874 1,092 20 3,742 11
Long-term debt 26,173 25,642 23,932 24,344 20,372 26,378
Shareholders’ equity 49,463 48,024 50,214 51,483 52,551 51,428
Total capital 77,424 76,540 75,238 75,847 76,665 77,817
Financial Ratios
Retention rate (RR)4 0.22 0.20 0.00 0.03 0.30 0.11
Return on invested capital (ROIC)5 6.93% 6.89% 5.62% 5.55% 7.23% 5.74%
Averages
RR 0.14
ROIC 6.33%
 
FCFF growth rate (g)6 0.91%

Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).

1 See details »

2026 Calculations

2 Interest expense, net, after tax = Interest expense, net × (1 – EITR)
= 715 × (1 – 21.20%)
= 563

3 EBIT(1 – EITR) = Net income attributable to Medtronic + Interest expense, net, after tax
= 4,801 + 563
= 5,364

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [5,364 – 4,202] ÷ 5,364
= 0.22

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 5,364 ÷ 77,424
= 6.93%

6 g = RR × ROIC
= 0.14 × 6.33%
= 0.91%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (135,874 × 12.07% – 6,036) ÷ (135,874 + 6,036)
= 7.30%

where:

Total capital, fair value0 = current fair value of Medtronic PLC debt and equity (US$ in millions)
FCFF0 = the last year Medtronic PLC free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Medtronic PLC capital

FCFF growth rate (g) forecast

Medtronic PLC, H-model

Microsoft Excel
Year Value gt
1 g1 0.91%
2 g2 2.51%
3 g3 4.11%
4 g4 5.71%
5 and thereafter g5 7.30%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 0.91% + (7.30% – 0.91%) × (2 – 1) ÷ (5 – 1)
= 2.51%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 0.91% + (7.30% – 0.91%) × (3 – 1) ÷ (5 – 1)
= 4.11%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 0.91% + (7.30% – 0.91%) × (4 – 1) ÷ (5 – 1)
= 5.71%