Is It Too Late To Consider Stryker After Its Robotics Expansion And Strong Share Gains?

• If you are wondering whether Stryker at around $353 a share is attractively valued or whether the market has already priced in its strengths, you are in the right place to unpack what the current valuation really implies.
• The stock is roughly flat in the short term, down 0.3% over the last week and 3.1% over the last month. However, it still reflects solid longer term gains of 49.8% over 3 years and 56.9% over 5 years.
• Recent headlines have focused on Stryker expanding its medical technology portfolio and reinforcing its presence in high growth areas such as robotics assisted surgery and advanced orthopedic implants. This helps explain why many investors still see it as a structural growth story. At the same time, ongoing healthcare spending, hospital capital budgets, and regulatory developments continue to shape expectations for how durable that growth might be.
• Despite that backdrop, Stryker only scores 1 out of 6 on our undervaluation checks. In the sections that follow, we will walk through different valuation approaches to assess whether the current price holds up, and then conclude with a more intuitive way to think about what the stock might be worth.

Stryker scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Stryker Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in dollar terms. For Stryker, the latest twelve month Free Cash Flow is about $4.1 billion, and analysts expect this to rise steadily as the business scales.

Using a 2 Stage Free Cash Flow to Equity model, analyst forecasts are used for the next few years. After that period, Simply Wall St extrapolates further growth. Under these assumptions, Stryker’s Free Cash Flow is projected to reach roughly $7.1 billion in 2035. When all those future cash flows are discounted back, the model arrives at an intrinsic value of about $298 per share.

Compared with the current share price of roughly $353, this suggests Stryker is about 18.6% overvalued on a DCF basis. In other words, the market is already assigning a premium for its growth prospects and quality profile.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Stryker may be overvalued by 18.6%. Discover 917 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Stryker.

Approach 2: Stryker Price vs Earnings

For a profitable company like Stryker, the Price to Earnings, or PE, ratio is a practical way to gauge valuation because it links what investors pay today to the profits the business is generating right now. In general, companies with stronger, more reliable growth and lower perceived risk can justify higher PE ratios, while slower growth or higher risk should translate into lower, more conservative multiples.

Stryker currently trades on a PE of about 45.9x, which is well above both the Medical Equipment industry average of roughly 30.6x and the peer group average of around 41.4x. To go a step further, Simply Wall St calculates a proprietary Fair Ratio that reflects Stryker specific earnings growth, margins, risk profile, size, and industry dynamics. This makes it more tailored than simple peer or industry comparisons, which can miss important differences in quality and outlook.

For Stryker, the Fair Ratio is estimated at 37.1x, noticeably below the current 45.9x. That gap suggests investors are paying a premium above what would typically be warranted by its fundamentals, even after accounting for growth and quality.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Stryker Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. This is a simple way to connect your view of Stryker’s future to concrete numbers by turning your story about its growth, margins, and risks into a forecast for revenue and earnings, which then flows through to a Fair Value you can compare against today’s price.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to set their own assumptions, see how that changes a company’s estimated Fair Value, and quickly judge whether it looks like a buy, hold, or sell compared to the current market price.

Because Narratives update dynamically when new information, such as earnings releases, guidance changes, or major news hits the market, your Fair Value view stays live rather than locked into a static spreadsheet that can quickly go out of date.

For Stryker, for example, one investor might build a bullish Narrative that assumes high single digit revenue growth, expanding margins, and a Fair Value closer to the current consensus target near $428. A more cautious investor might instead plug in slower growth and more pressure on margins, arriving at a Fair Value nearer $316 and therefore a very different buy or sell decision.

Do you think there's more to the story for Stryker? 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.

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