Stryker Corp. (NYSE:SYK)

The financial data reveals several notable trends across the analyzed periods. Net sales consistently represent 100% each year, establishing a stable baseline for percentage analysis.

Cost of sales and gross profit

Cost of sales as a percentage of net sales remained relatively stable from 2017 to 2019, fluctuating slightly around 34%. However, in 2020, there was a noticeable increase to 36.89%, slightly decreasing to 35.89% in 2021. Correspondingly, gross profit margins declined in 2020 to 63.11% from previous years where they hovered above 65%, with a modest rebound in 2021 to 64.11%. This indicates some pressure on production or procurement costs impacting profitability during the pandemic year, followed by partial recovery.

Research, development, and engineering expenses

These expenses steadily increased as a share of net sales, rising from 6.32% in 2017 to 7.22% in 2021, reflecting a continuous commitment to innovation and product development. The upward trend is consistent and indicates prioritization of R&D investment despite other cost pressures.

Selling, general and administrative expenses

SG&A expenses showed some variability but remained high, fluctuating between 35.98% and 37.57% over the period. The highest percentages appeared toward the later years, suggesting sustained or increasing overhead costs, which may relate to sales support, administrative functions, or marketing efforts.

Recall charges and amortization of intangible assets

Recall charges exhibited considerable variability, with a peak in 2017 at -1.39% and considerable reductions in most subsequent years but with a slight rise again in 2021 to -0.6%. This uneven pattern highlights episodic costs associated with product recalls or quality issues. Amortization of intangible assets increased steadily from 2.98% to 3.62%, implying increased intangible asset bases or acceleration in amortization schedules.

Operating expenses and operating income

Operating expenses as a percentage of net sales remained relatively stable but showed a slight increase overall, reaching 49.01% in 2021 compared with 47.28% in 2017. Operating income margin demonstrated a declining trend, with a high of 18.65% in 2018 dropping to 15.1% in 2021. This decline reflects the combined impact of increased costs and expenses noted above, indicating some erosion in operational profitability over time.

Interest expense and other income (expense), net

Interest expense remained fairly consistent, slightly below 2% of net sales across all years, pointing to a stable debt cost profile. Other income showed fluctuations, peaking at 0.91% in 2019 but dropping thereafter to lower levels, which suggests variability in non-operating income or charges.

Earnings before income taxes and income taxes

Earnings before income taxes followed a similar declining pattern as operating income, decreasing from over 17% in 2018 and 2019 to just above 13% in 2021. Income taxes displayed unusual behavior, with a positive value reported in 2018 contrary to other years and negative values afterward, indicating possible tax benefits or credits realized in later years that offset tax liabilities.

Net earnings

Net earnings as a percentage of net sales saw considerable fluctuation. The unusually high figure of 26.12% in 2018 stands out, possibly due to extraordinary items or tax effects. Otherwise, net earnings declined from the 2017 baseline of 8.2% to just over 11% in 2021 after recovering somewhat from a low in 2020. This suggests volatility in bottom-line profitability influenced by operational and tax-related factors across the period.

Overall, the data indicates a period of financial pressure with rising costs and expenses alongside steady investments in research and development. While gross profitability was challenged primarily in 2020, partial recovery occurred by 2021. Operating and net earnings margins have faced downward pressure, underlining potential challenges in managing expenses and sustaining profit levels over recent years.