QS Research · Michael Burry's Scion Capital analyst template · 2006
Medtronic plc (MDT)
As of 2026-11-08 · 11/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -18% · upside +25%
Medtronic is a cash-generative diversified device maker whose TTM base at today's 15.6x EV/EBITDA is about $101.5 per share, essentially the $101.80 close, so the stock is not mispriced on current earnings power. Downside at the same 15.6x on a 15% EBITDA contraction to $8.26B gives about $83.7 (-17.8%), while upside at 19.0x on TTM EBITDA of $9.72B gives about $127.3 (+25.0%), using the completed MiniMed split-off, 55M share retirement and raised FY27 guidance as the rerating catalysts rather than the valuation itself. The base case is not +30%, so this is not a long; the upside is not low enough for a short. Watch: the quality and cash yield are interesting, but the deep-value hurdle is not met at today's price.
Key numbers
- Share price: $101.80
- Market cap: $130.22B
- Latest financial period: TTM to Jul 31, 2026
- Revenue (TTM): $37.54B
- EV / EBITDA (TTM): 15.6x
- P/E (TTM): 24.9x
- Price / book: 2.59x
The 15 boxes
- ✓ 1. Long-form business notes
Medtronic sells implantable devices and surgical/disposable products through three reportable segments (Cardiovascular, Neuroscience, Medical Surgical) via a direct-plus-distributor sales force and hospital consignment, with no customer over 10% of net sales; FY2026 revenue was $36.36B versus $30.12B in FY2021, with operating income $6.47B and operating cash flow $7.33B against $1.90B of capex. The big structural change over the window is portfolio surgery: the Diabetes Operating Unit went from a fourth reportable segment in FY2021 to deconsolidated from segment reporting in Q4 FY2026 after MiniMed's March 9, 2026 IPO, mechanical circulatory support (HVAD) was pulled in June 2021, and Medical Surgical's ventilator and renal lines of FY2021 no longer appear in the FY2026 business description while PulseSelect/Affera ablation, Evolut FX, Symplicity Spyral renal denervation and Hugo robotics now do. Capital returns slowed sharply in FY2026 (buybacks $1.03B versus $3.23B in FY2025) while diluted shares fell to 1,288.1M from 1,354.0M in FY2021.
- ○ 2. Competitive advantage
The record shows scale and cash generation rather than a demonstrated pricing moat: revenue rose from $30.12B in FY2021 to $36.36B in FY2026 (up 20.7% over five years, about 3.8% a year) with only one down year (FY2023, -1.5%), while operating income ran $4.48B-$6.47B, a 14.9%-18.1% operating margin band that has not broken out of the high teens. Operating cash flow of $6.04B-$7.35B every year against capex of only $1.35B-$1.90B says the business converts revenue into cash with modest capital, but the 10-K's own competition language (large diversified rivals to niche specialists, GLP-1 drug therapies, China volume-based procurement forcing price concessions, reimbursement as the gate on price) describes a business that competes on product performance and breadth, not on toll-booth economics. Evidence of durability is therefore mixed: steady margins and cash, but an explicit admission of past market-share losses and no gross-margin line in the data to test pricing power.
- ✓ 3. 10-Q takeaways
The Q1 FY27 10-Q (quarter ended 2026-07-31) shows total net sales of $9.756 billion, up 14% reported and 13.7% organic, helped by an extra fiscal week worth roughly $570 million; growth was broad across Cardiovascular (+20%), Neuroscience (+10%), Medical Surgical (+10%) and Diabetes (+17%). GAAP operating margin was 18.1% (+120 bps) and non-GAAP 23.7% (+10 bps),with GAAP net income of $1.470 billion boosted by a $64 million minority-investment gain, while non-GAAP net income was $1.860 billion ($1.45 diluted EPS). Operating cash flow nearly doubled to $1.793 billion and free cash flow was $1.290 billion; guidance was raised to 7.25%-7.75% organic revenue growth and $5.94-$6.00 non-GAAP diluted EPS for FY27.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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