Medtronic (NYSE:MDT) announced its results for the most recent quarter on November 20, 2012. Medtronic provides products and therapies for medical professionals.

Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: Can Earnings Guidance Accurately Predict The Future?

The Numbers: Medtronic's EPS fell in line with analyst expectations of 88 cents per share while revenue of $4.09 billion missed estimates of $4.23 billion. Revenue climbed 1.8% from the same period last year. Medtronic reported profit of $646 million during the second quarter. According to the reported number, this is down 25.8% from last year's figures. With last quarter's falling profit, the company ends a run of four consecutive quarters of year-over-year profit increases.

Management Quote: "Our second quarter performance reflects the results of our ongoing focus to deliver consistent and dependable growth in a changing healthcare environment," said Omar Ishrak, Medtronic chairman and chief executive officer. "Our growth was broad-based across several businesses and geographies, driven by continued stabilization of our end markets and the ongoing successful execution of new product launches."

A Look Back: Net income has increased 12.4% year-over-year on average across the last five quarters. The biggest gain came in the second quarter of the last fiscal year, when income climbed 53.9% from the year-earlier quarter.

Looking Ahead: When earnings estimates stay consistent leading up to earnings season, this usually shows analysts accurately predicted earnings estimates and business is stable. Be cautious though as this may also be a warnings sign that earnings could come at a huge surprise to the upside or downside as analyst did not correctly predict earnings. Steady earnings estimates mean there is not enough change going on with the company to make analysts change their opinions. When earning estimates are steady, investors can look at the revenue trend for a more fundamental indicator. For the fiscal year, the average estimate has been unchanged at $3.66 a share.



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Tickers in this Article: MDT

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