SMITH & NEPHEW PLC -SPON ADR (SNN) Stock Fundamental Analysis
NYSE:SNN - New York Stock Exchange, Inc. - US83175M2052 - ADR - Currency: USD
SNN gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 187 industry peers in the Health Care Equipment & Supplies industry. While SNN belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. SNN is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year SNN was profitable.
SNN had a positive operating cash flow in the past year.
In the past 5 years SNN has always been profitable.
Each year in the past 5 years SNN had a positive operating cash flow.
1.2 Ratios
SNN has a better Return On Assets (3.98%) than 81.82% of its industry peers.
SNN's Return On Equity of 7.83% is amongst the best of the industry. SNN outperforms 82.35% of its industry peers.
The Return On Invested Capital of SNN (8.26%) is better than 87.70% of its industry peers.
The Average Return On Invested Capital over the past 3 years for SNN is in line with the industry average of 7.89%.
The 3 year average ROIC (7.67%) for SNN is below the current ROIC(8.26%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.98% | ||
| ROE | 7.83% | ||
| ROIC | 8.26% |
ROA(3y)2.95%
ROA(5y)3.54%
ROE(3y)5.7%
ROE(5y)7%
ROIC(3y)7.67%
ROIC(5y)6.98%
1.3 Margins
SNN has a better Profit Margin (7.09%) than 79.14% of its industry peers.
SNN's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 14.48%, SNN belongs to the top of the industry, outperforming 83.96% of the companies in the same industry.
In the last couple of years the Operating Margin of SNN has declined.
Looking at the Gross Margin, with a value of 69.64%, SNN is in the better half of the industry, outperforming 79.68% of the companies in the same industry.
In the last couple of years the Gross Margin of SNN has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.48% | ||
| PM (TTM) | 7.09% | ||
| GM | 69.64% |
OM growth 3Y3.51%
OM growth 5Y-5.16%
PM growth 3Y-10.98%
PM growth 5Y-9.49%
GM growth 3Y-0.41%
GM growth 5Y-1.1%
2. Health
2.1 Basic Checks
SNN has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for SNN remains at a similar level compared to 1 year ago.
The number of shares outstanding for SNN remains at a similar level compared to 5 years ago.
The debt/assets ratio for SNN is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 3.34 indicates that SNN is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 3.34, SNN is doing good in the industry, outperforming 70.59% of the companies in the same industry.
SNN has a debt to FCF ratio of 5.48. This is a neutral value as SNN would need 5.48 years to pay back of all of its debts.
SNN has a Debt to FCF ratio of 5.48. This is amongst the best in the industry. SNN outperforms 80.75% of its industry peers.
SNN has a Debt/Equity ratio of 0.62. This is a neutral value indicating SNN is somewhat dependend on debt financing.
SNN's Debt to Equity ratio of 0.62 is on the low side compared to the rest of the industry. SNN is outperformed by 67.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 5.48 | ||
| Altman-Z | 3.34 |
ROIC/WACC1.01
WACC8.18%
2.3 Liquidity
SNN has a Current Ratio of 2.89. This indicates that SNN is financially healthy and has no problem in meeting its short term obligations.
SNN has a Current ratio of 2.89. This is comparable to the rest of the industry: SNN outperforms 55.62% of its industry peers.
SNN has a Quick Ratio of 1.33. This is a normal value and indicates that SNN is financially healthy and should not expect problems in meeting its short term obligations.
SNN has a Quick ratio of 1.33. This is in the lower half of the industry: SNN underperforms 65.78% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.89 | ||
| Quick Ratio | 1.33 |
3. Growth
3.1 Past
SNN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 56.12%, which is quite impressive.
SNN shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -7.22% yearly.
The Revenue has been growing slightly by 4.70% in the past year.
The Revenue has been growing slightly by 2.49% on average over the past years.
EPS 1Y (TTM)56.12%
EPS 3Y-7.63%
EPS 5Y-7.22%
EPS Q2Q%116.11%
Revenue 1Y (TTM)4.7%
Revenue growth 3Y3.69%
Revenue growth 5Y2.49%
Sales Q2Q%5.97%
3.2 Future
Based on estimates for the next years, SNN will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.76% on average per year.
Based on estimates for the next years, SNN will show a small growth in Revenue. The Revenue will grow by 5.45% on average per year.
EPS Next Y16.67%
EPS Next 2Y14.9%
EPS Next 3Y11.11%
EPS Next 5Y11.76%
Revenue Next Year5.42%
Revenue Next 2Y5.3%
Revenue Next 3Y5.14%
Revenue Next 5Y5.45%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 32.59 indicates a quite expensive valuation of SNN.
Based on the Price/Earnings ratio, SNN is valued a bit cheaper than the industry average as 73.26% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of SNN to the average of the S&P500 Index (27.15), we can say SNN is valued slightly more expensively.
The Price/Forward Earnings ratio is 14.41, which indicates a correct valuation of SNN.
SNN's Price/Forward Earnings ratio is rather cheap when compared to the industry. SNN is cheaper than 85.03% of the companies in the same industry.
SNN is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.60, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.59 | ||
| Fwd PE | 14.41 |
4.2 Price Multiples
SNN's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. SNN is cheaper than 90.37% of the companies in the same industry.
SNN's Price/Free Cash Flow ratio is rather cheap when compared to the industry. SNN is cheaper than 86.63% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.11 | ||
| EV/EBITDA | 10.71 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates SNN does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of SNN may justify a higher PE ratio.
PEG (NY)1.95
PEG (5Y)N/A
EPS Next 2Y14.9%
EPS Next 3Y11.11%
5. Dividend
5.1 Amount
SNN has a Yearly Dividend Yield of 2.60%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.82, SNN pays a better dividend. On top of this SNN pays more dividend than 97.86% of the companies listed in the same industry.
SNN's Dividend Yield is comparable with the S&P500 average which is at 2.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
5.2 History
The dividend of SNN has a limited annual growth rate of 0.55%.
SNN has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of SNN decreased in the last 3 years.
Dividend Growth(5Y)0.55%
Div Incr Years1
Div Non Decr Years2
5.3 Sustainability
79.37% of the earnings are spent on dividend by SNN. This is not a sustainable payout ratio.
The dividend of SNN is growing, but earnings are growing more, so the dividend growth is sustainable.
DP79.37%
EPS Next 2Y14.9%
EPS Next 3Y11.11%
30.63
+0.41 (+1.36%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Equipment & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners67.14%
Inst Owner Change-4.92%
Ins Owners0.12%
Ins Owner ChangeN/A
Market Cap13.40B
Analysts74.4
Price Target34.09 (11.3%)
Short Float %0.67%
Short Ratio3.38
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
Yearly Dividend0.37
Dividend Growth(5Y)0.55%
DP79.37%
Div Incr Years1
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)N/A
Avg EPS beat(2)N/A
Min EPS beat(2)N/A
Max EPS beat(2)N/A
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)N/A
Avg Revenue beat(2)N/A
Min Revenue beat(2)N/A
Max Revenue beat(2)N/A
Revenue beat(4)N/A
Avg Revenue beat(4)N/A
Min Revenue beat(4)N/A
Max Revenue beat(4)N/A
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)1.13%
PT rev (3m)3.2%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)0.02%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.42%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.59 | ||
| Fwd PE | 14.41 | ||
| P/S | 2.31 | ||
| P/FCF | 22.11 | ||
| P/OCF | 13.58 | ||
| P/B | 2.55 | ||
| P/tB | 11.1 | ||
| EV/EBITDA | 10.71 |
EPS(TTM)0.94
EY3.07%
EPS(NY)2.13
Fwd EY6.94%
FCF(TTM)1.39
FCFY4.52%
OCF(TTM)2.26
OCFY7.36%
SpS13.28
BVpS12.03
TBVpS2.76
PEG (NY)1.95
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.98% | ||
| ROE | 7.83% | ||
| ROCE | 9.53% | ||
| ROIC | 8.26% | ||
| ROICexc | 8.89% | ||
| ROICexgc | 17.58% | ||
| OM | 14.48% | ||
| PM (TTM) | 7.09% | ||
| GM | 69.64% | ||
| FCFM | 10.43% |
ROA(3y)2.95%
ROA(5y)3.54%
ROE(3y)5.7%
ROE(5y)7%
ROIC(3y)7.67%
ROIC(5y)6.98%
ROICexc(3y)8.09%
ROICexc(5y)7.69%
ROICexgc(3y)16.87%
ROICexgc(5y)16.94%
ROCE(3y)8.97%
ROCE(5y)8.12%
ROICexcg growth 3Y-2.43%
ROICexcg growth 5Y-8.17%
ROICexc growth 3Y4.17%
ROICexc growth 5Y-4.59%
OM growth 3Y3.51%
OM growth 5Y-5.16%
PM growth 3Y-10.98%
PM growth 5Y-9.49%
GM growth 3Y-0.41%
GM growth 5Y-1.1%
F-Score7
Asset Turnover0.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.62 | ||
| Debt/FCF | 5.48 | ||
| Debt/EBITDA | 2.19 | ||
| Cap/Depr | 59.07% | ||
| Cap/Sales | 6.56% | ||
| Interest Coverage | 6.01 | ||
| Cash Conversion | 66.42% | ||
| Profit Quality | 147.09% | ||
| Current Ratio | 2.89 | ||
| Quick Ratio | 1.33 | ||
| Altman-Z | 3.34 |
F-Score7
WACC8.18%
ROIC/WACC1.01
Cap/Depr(3y)59.87%
Cap/Depr(5y)66.08%
Cap/Sales(3y)7.04%
Cap/Sales(5y)7.73%
Profit Quality(3y)88.41%
Profit Quality(5y)92.91%
High Growth Momentum
Growth
EPS 1Y (TTM)56.12%
EPS 3Y-7.63%
EPS 5Y-7.22%
EPS Q2Q%116.11%
EPS Next Y16.67%
EPS Next 2Y14.9%
EPS Next 3Y11.11%
EPS Next 5Y11.76%
Revenue 1Y (TTM)4.7%
Revenue growth 3Y3.69%
Revenue growth 5Y2.49%
Sales Q2Q%5.97%
Revenue Next Year5.42%
Revenue Next 2Y5.3%
Revenue Next 3Y5.14%
Revenue Next 5Y5.45%
EBIT growth 1Y37.87%
EBIT growth 3Y7.32%
EBIT growth 5Y-2.8%
EBIT Next Year72.38%
EBIT Next 3Y25.75%
EBIT Next 5Y17.73%
FCF growth 1Y234.81%
FCF growth 3Y8.92%
FCF growth 5Y-4.43%
OCF growth 1Y62.34%
OCF growth 3Y4.02%
OCF growth 5Y-3.31%