Mar. 29, 2016, Valuentum
Summary
The integration of Covidien may steal the headlines in coming quarters, but all three of Medtronic’s legacy businesses are performing well.
We’re watching the company’s growing financial leverage after taking on a significant amount of debt to facilitate the Covidien transaction. Its short and long-term borrowings have nearly tripled since 2013.
Medtronic plans to return at least 50% of its adjusted free cash flow to shareholders, and is targeting $40 billion in free cash flow over the next five years.
Let’s take a look at the firm’s investment considerations as we walk through the valuation process and derive a fair value estimate for shares.
