• If you are wondering whether Medtronic is offering good value right now, you are not alone, especially with so much focus on entry price and long term returns.
• The stock last closed at US$87.14, after a 1.1% gain over the past week, a 9.8% decline over 30 days, a 9.3% decline year to date, and a 2.6% return over the past year.
• Recent headlines around Medtronic have centered on its position as a major medical technology company and ongoing interest from investors who follow large, established healthcare names. These updates help frame how investors are thinking about the balance between growth potential and risk at current prices.
• Right now Medtronic holds a valuation score of 5/6. This sets up a closer look at how different valuation methods assess the stock and suggests a more complete way to think about value that will be covered at the end of this article.

Approach 1: Medtronic Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today’s value. It is essentially asking what all of Medtronic’s future cash flows are worth in today’s dollars.

For Medtronic, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at about $5.4b. Analyst estimates are provided for several years, with Simply Wall St extrapolating further to arrive at a projected free cash flow of $8.9b in 2035, all in $ and then discounted back to today.

Putting these projections together, the DCF model arrives at an estimated intrinsic value of US$93.57 per share. Compared with the recent share price of US$87.14, this points to an implied discount of 6.9%, which suggests the shares are trading close to the model’s estimate of fair value rather than at a large discount or premium.

Result: ABOUT RIGHT

Medtronic is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Medtronic Price vs Earnings

For a profitable company like Medtronic, the P/E ratio is a useful way to gauge how much you are paying for each dollar of earnings. What investors usually consider a “normal” P/E depends on how quickly earnings are expected to grow and how much risk they see in those earnings.

Medtronic currently trades on a P/E of 24.25x. That compares with an average P/E of 27.18x for the Medical Equipment industry and a peer average of 39.56x. On these simple comparisons, the stock sits below both its industry and the broader peer group.

Simply Wall St’s Fair Ratio for Medtronic is 37.79x. This is a proprietary estimate of what the P/E might be given factors such as earnings growth, profit margins, industry, market cap and company specific risks. Because it builds all of these into one number, the Fair Ratio can give a more tailored view of value than a straight comparison to industry or peer averages.

Comparing the Fair Ratio of 37.79x with the current P/E of 24.25x suggests the shares are trading below this model based estimate of a “fair” multiple.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Medtronic Narrative

Earlier it was mentioned that there is an even better way to understand valuation. This is where Narratives come in, giving you a simple way to attach a clear story about Medtronic to the numbers you care about, such as fair value, future revenue, earnings and margins.

A Narrative on Simply Wall St is your view of the company written as a story that connects what Medtronic does, where you think it is heading and the assumptions you are making about its financials, instead of looking at isolated ratios in a vacuum.

Each Narrative links three pieces together: the business story, a forecast that reflects that story and a resulting fair value that you can compare directly with the current share price. This can help you decide whether Medtronic looks attractive, fully priced or expensive based on your assumptions.

These Narratives sit on the Community page used by millions of investors, are easy to browse and create, and update automatically when new information such as earnings releases, product news or analyst estimate changes flows into the platform. This means your Medtronic view stays current without extra work from you.

For example, one Medtronic Narrative on Simply Wall St currently applies a fair value of about US$72.10 per share, while another applies about US$118.00. This shows how two investors looking at the same company can reach very different conclusions once their stories and assumptions are made explicit.

For Medtronic however we will make it really easy for you with previews of two leading Medtronic Narratives:

Fair value in this Narrative: US$95.00 per share.

Implied discount to this fair value: about 8.3% compared with the last close at US$87.14.

Revenue growth assumption in this view: 5.15%.

• Highlights a broad product mix across cardiovascular, medical surgical, neuroscience and diabetes that spreads risk across multiple drivers.
• Points to heavy R&D spend, acquisitions in robotics and AI tools, and a long dividend record as key supports for the business.
• Flags regulatory, recall, competition and technology shifts as real risks that could affect how the valuation plays out.

Fair value in this Narrative: US$82.66 per share.

Implied premium to this fair value: about 5.4% compared with the last close at US$87.14.

Revenue growth assumption in this view: 4.58%.

• Emphasizes tough competition across diabetes, cardiovascular and surgical devices, with pressure from peers on growth and pricing.
• Highlights supply chain issues, regulatory hurdles and currency exposure as factors that could weigh on margins and execution.
• Describes Medtronic as a balanced growth and income name, with the share price sitting above this Narrative’s fair value estimate.

Do you think there's more to the story for Medtronic? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.