• Considering whether Medtronic stock is starting to look like value, or if the recent share price still leaves limited upside for new buyers.
• Medtronic closed at US$77.60, with recent total returns showing a 2.2% loss over 7 days, a 10.1% loss over 30 days, and a 19.2% loss year to date, adding to a 3.7% loss over 1 year, 4.3% loss over 3 years, and 26.6% loss over 5 years.
• Recent coverage has continued to focus on Medtronic as a major global medical technology company, highlighting how it is positioned in the wider healthcare sector and the role its devices play in treating chronic conditions. This context helps frame how investors are reacting to the stock's multi year share price performance and what they may now be expecting from the business.
• On Simply Wall St's valuation checks, Medtronic scores a 5 out of 6. Next is a closer look at what different valuation methods say about the stock today and how a more complete framework can give an even clearer view of value by the end of this article.

Approach 1: Medtronic Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting the cash the company may generate in the future and discounting those amounts back to today. It is essentially a way of translating future cash flows into a single present value per share.

For Medtronic, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $5.44b. Analysts provide free cash flow estimates out to 2028, with Simply Wall St extrapolating beyond that to build a 10 year path that runs from about $5.74b in 2026 up to roughly $8.74b by 2035. These cash flows are then discounted back to today using the model’s required return assumptions.

On this basis, the DCF model arrives at an estimated intrinsic value of about $95.41 per share, compared with Medtronic’s recent share price of $77.60. That gap implies the stock is trading at roughly an 18.7% discount to this DCF estimate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Medtronic is undervalued by 18.7%. Track this in your watchlist or portfolio, or discover 44 more high quality undervalued stocks.

Approach 2: Medtronic Price vs Earnings

For a profitable company, the P/E ratio is often a useful yardstick because it links what you pay for the stock directly to the earnings it generates. Investors usually accept a higher or lower P/E depending on what they expect for future growth and how risky they think those earnings are.

Medtronic currently trades on a P/E of 21.6x. That sits below the Medical Equipment industry average of 23.9x and below the peer group average of 33.7x, which indicates the stock is priced more conservatively than many listed peers.

Simply Wall St’s Fair Ratio for Medtronic is 27.5x. This is a proprietary estimate of what the company’s P/E might be, given its earnings growth profile, industry, profit margins, market cap and risk factors. Because it is tailored to the company, the Fair Ratio can be more informative than a simple comparison with industry or peer averages, which may have very different growth, risk and profitability characteristics.

Comparing the Fair Ratio of 27.5x with the actual P/E of 21.6x, the stock currently appears undervalued on this multiple-based framework.

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, a simple way for you to connect your view of Medtronic’s story with the numbers behind its fair value by linking your assumptions about future revenue, earnings and margins to a forecast, and then comparing that fair value with today’s share price on Simply Wall St’s Community page. Narratives are updated automatically when fresh data such as news or earnings arrives. Medtronic examples already range from a more optimistic view that uses assumptions like a fair value of about US$108 with revenue growth of roughly 4.8%, a profit margin of about 15.9% and a future P/E near 27.9x, through to a more cautious view that uses a fair value closer to US$82.66 with revenue growth of about 4.58%, a profit margin near 13.0% and a future P/E around 24.21x. This can help you decide whether the current price looks attractive, expensive or somewhere in between based on the story you believe.

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.