Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Medtronic PLC (NYSE:MDT)

Economic Value Added (EVA)

Advanced level

Economic Profit

Medtronic PLC, economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015
Net operating profit after taxes (NOPAT)1 4,171  5,234  2,432  3,655  3,751  2,202 
Cost of capital2 8.03% 8.22% 8.15% 7.74% 7.76% 7.47%
Invested capital3 70,316  71,992  70,159  79,337  77,056  78,744 
 
Economic profit4 (1,474) (685) (3,283) (2,488) (2,230) (3,677)

Based on: 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,1718.03% × 70,316 = -1,474

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Medtronic PLC’s economic profit increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

Medtronic PLC, NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015
Net income attributable to Medtronic 4,789  4,631  3,104  4,028  3,538  2,675 
Deferred income tax expense (benefit)1 (1,277) (438) (1,115) (876) (477) (819)
Increase (decrease) in allowance for doubtful accounts2 18  (3) 38  (6) 17  29 
Increase (decrease) in deferred revenue3 (12) 26  —  —  —  — 
Increase (decrease) in restructuring reserve4 (10) 19  (124) 34  27  131 
Increase (decrease) in equity equivalents5 (1,281) (396) (1,201) (848) (433) (659)
Interest expense 1,092  1,444  1,146  1,094  1,386  666 
Interest expense, operating lease liability6 28  35  30  28  23  20 
Adjusted interest expense 1,120  1,479  1,176  1,122  1,409  686 
Tax benefit of interest expense7 (235) (311) (359) (393) (493) (240)
Adjusted interest expense, after taxes8 885  1,169  817  729  916  446 
(Gain) loss on marketable securities (3) 44  (5) (19) 17  (14)
Interest income (300) (283) (397) (366) (431) (386)
Investment income, before taxes (303) (239) (402) (385) (414) (400)
Tax expense (benefit) of investment income9 64  50  123  135  145  140 
Investment income, after taxes10 (239) (189) (279) (250) (269) (260)
Net income (loss) attributable to noncontrolling interest 17  19  (9) (4) —  — 
Net operating profit after taxes (NOPAT) 4,171  5,234  2,432  3,655  3,751  2,202 

Based on: 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in restructuring reserve.

5 Addition of increase (decrease) in equity equivalents to net income attributable to Medtronic.

6 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 945 × 3.00% = 28

7 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,120 × 21.00% = 235

8 Addition of after taxes interest expense to net income attributable to Medtronic.

9 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 303 × 21.00% = 64

10 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Medtronic PLC’s NOPAT increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Cash Operating Taxes

Medtronic PLC, cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015
Income tax provision (benefit) (751) 547  2,580  578  798  811 
Less: Deferred income tax expense (benefit) (1,277) (438) (1,115) (876) (477) (819)
Add: Tax savings from interest expense 235  311  359  393  493  240 
Less: Tax imposed on investment income 64  50  123  135  145  140 
Cash operating taxes 698  1,245  3,931  1,712  1,623  1,730 

Based on: 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Medtronic PLC’s cash operating taxes decreased from 2018 to 2019 and from 2019 to 2020.

Invested Capital

Medtronic PLC, invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015
Current debt obligations 2,776  838  2,058  7,520  993  2,434 
Long-term debt 22,021  24,486  23,699  25,921  30,247  33,752 
Operating lease liability1 945  553  671  574  483  566 
Total reported debt & leases 25,742  25,877  26,428  34,015  31,723  36,752 
Shareholders’ equity 50,737  50,091  50,720  50,294  52,063  53,230 
Net deferred tax (assets) liabilities2 (2,438) (889) (704) 1,631  1,649  2,710 
Allowance for doubtful accounts3 208  190  193  155  161  144 
Deferred revenue4 303  315  289  —  —  — 
Restructuring reserve5 112  186  167  291  257  230 
Equity equivalents6 (1,815) (198) (55) 2,077  2,067  3,084 
Accumulated other comprehensive (income) loss, net of tax7 3,560  2,711  1,786  2,613  1,868  1,184 
Noncontrolling interests 135  121  102  122  —  — 
Adjusted shareholders’ equity 52,617  52,725  52,553  55,106  55,998  57,498 
Construction in progress8 (1,202) (1,111) (1,058) (895) (777) (683)
Available-for-sale debt securities9 (6,841) (5,499) (7,764) (8,889) (9,888) (14,823)
Invested capital 70,316  71,992  70,159  79,337  77,056  78,744 

Based on: 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of restructuring reserve.

6 Addition of equity equivalents to shareholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction in progress.

9 Subtraction of available-for-sale debt securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Medtronic PLC’s invested capital increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level.

Cost of Capital

Medtronic PLC, cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 125,961  125,961  ÷ 154,436  = 0.82 0.82 × 9.42% = 7.68%
Debt3 27,530  27,530  ÷ 154,436  = 0.18 0.18 × 2.37% × (1 – 21.00%) = 0.33%
Operating lease liability4 945  945  ÷ 154,436  = 0.01 0.01 × 3.00% × (1 – 21.00%) = 0.01%
Total: 154,436  1.00 8.03%

Based on: 10-K (filing date: 2020-06-19).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 133,284  133,284  ÷ 160,468  = 0.83 0.83 × 9.42% = 7.82%
Debt3 26,631  26,631  ÷ 160,468  = 0.17 0.17 × 2.93% × (1 – 21.00%) = 0.38%
Operating lease liability4 553  553  ÷ 160,468  = 0.00 0.00 × 6.39% × (1 – 21.00%) = 0.02%
Total: 160,468  1.00 8.22%

Based on: 10-K (filing date: 2019-06-21).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 117,342  117,342  ÷ 143,619  = 0.82 0.82 × 9.42% = 7.69%
Debt3 25,606  25,606  ÷ 143,619  = 0.18 0.18 × 3.54% × (1 – 30.50%) = 0.44%
Operating lease liability4 671  671  ÷ 143,619  = 0.00 0.00 × 4.46% × (1 – 30.50%) = 0.01%
Total: 143,619  1.00 8.15%

Based on: 10-K (filing date: 2018-06-22).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 120,668  120,668  ÷ 156,106  = 0.77 0.77 × 9.42% = 7.28%
Debt3 34,864  34,864  ÷ 156,106  = 0.22 0.22 × 3.12% × (1 – 35.00%) = 0.45%
Operating lease liability4 574  574  ÷ 156,106  = 0.00 0.00 × 4.81% × (1 – 35.00%) = 0.01%
Total: 156,106  1.00 7.74%

Based on: 10-K (filing date: 2017-06-27).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 117,353  117,353  ÷ 151,476  = 0.77 0.77 × 9.42% = 7.29%
Debt3 33,640  33,640  ÷ 151,476  = 0.22 0.22 × 3.18% × (1 – 35.00%) = 0.46%
Operating lease liability4 483  483  ÷ 151,476  = 0.00 0.00 × 4.66% × (1 – 35.00%) = 0.01%
Total: 151,476  1.00 7.76%

Based on: 10-K (filing date: 2016-06-28).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 108,507  108,507  ÷ 147,770  = 0.73 0.73 × 9.42% = 6.91%
Debt3 38,698  38,698  ÷ 147,770  = 0.26 0.26 × 3.19% × (1 – 35.00%) = 0.54%
Operating lease liability4 566  566  ÷ 147,770  = 0.00 0.00 × 3.52% × (1 – 35.00%) = 0.01%
Total: 147,770  1.00 7.47%

Based on: 10-K (filing date: 2015-06-23).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Medtronic PLC, economic spread ratio calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015
Selected Financial Data (US$ in millions)
Economic profit1 (1,474) (685) (3,283) (2,488) (2,230) (3,677)
Invested capital2 70,316  71,992  70,159  79,337  77,056  78,744 
Performance Ratio
Economic spread ratio3 -2.10% -0.95% -4.68% -3.14% -2.89% -4.67%
Benchmarks
Economic Spread Ratio, Competitors4
Becton, Dickinson & Co. -6.69% -6.35% -7.38% -4.57% -5.43% -5.12%
Boston Scientific Corp. -5.31% 0.86% -5.56% -8.17% -14.42%
Danaher Corp. -5.92% -4.23% -4.55% -5.08% -3.46%
Edwards Lifesciences Corp. 18.83% 14.69% 12.17% 11.99% 12.27%
Intuitive Surgical Inc. 29.15% 34.37% 32.01% 24.00% 21.49%
Stryker Corp. 1.57% 1.55% -1.78% 1.63% 4.33%
Thermo Fisher Scientific Inc. -5.30% -6.17% -9.31% -6.98% -7.00%
UnitedHealth Group Inc. 13.19% 11.69% 9.82% 6.68% 4.15%

Based on: 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,474 ÷ 70,316 = -2.10%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Medtronic PLC’s economic spread ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Economic Profit Margin

Medtronic PLC, economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Apr 24, 2020 Apr 26, 2019 Apr 27, 2018 Apr 28, 2017 Apr 29, 2016 Apr 24, 2015
Selected Financial Data (US$ in millions)
Economic profit1 (1,474) (685) (3,283) (2,488) (2,230) (3,677)
 
Net sales 28,913  30,557  29,953  29,710  28,833  20,261 
Add: Increase (decrease) in deferred revenue (12) 26  —  —  —  — 
Adjusted net sales 28,901  30,583  29,953  29,710  28,833  20,261 
Performance Ratio
Economic profit margin2 -5.10% -2.24% -10.96% -8.37% -7.74% -18.15%
Benchmarks
Economic Profit Margin, Competitors3
Becton, Dickinson & Co. -18.10% -16.60% -21.82% -13.11% -9.68% -11.70%
Boston Scientific Corp. -10.05% 1.40% -7.94% -11.83% -23.61%
Danaher Corp. -19.21% -9.52% -10.56% -12.74% -7.30%
Edwards Lifesciences Corp. 16.01% 11.46% 10.11% 10.52% 11.10%
Intuitive Surgical Inc. 21.60% 23.38% 17.19% 18.30% 15.67%
Stryker Corp. 2.46% 2.36% -2.51% 2.46% 5.33%
Thermo Fisher Scientific Inc. -10.94% -13.16% -23.02% -16.75% -16.03%
UnitedHealth Group Inc. 4.22% 3.66% 3.07% 2.06% 1.52%

Based on: 10-K (filing date: 2020-06-19), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-28), 10-K (filing date: 2015-06-23).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -1,474 ÷ 28,901 = -5.10%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Medtronic PLC’s economic profit margin improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.