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Stryker (SYK) Q4 Earnings Miss Estimates, Revenues Beat

Zacks Equity Research
·4-min read

Stryker Corporation SYK reported fourth-quarter 2021 adjusted earnings per share (EPS) of $2.71, which missed the Zacks Consensus Estimate of $2.72 by 0.4%. The bottom line fell 3.6% from the year-ago figure.

For full-year 2021, the company delivered adjusted EPS of $9.09, up 22.3% from the previous year. However, the figure lagged the consensus mark by 0.1%.

GAAP EPS in the quarter was $1.73, up 16.1% from the prior-year quarter.

Revenue Details

The Michigan-based medical device company reported revenues of $4.70 billion, which beat the Zacks Consensus Estimate by 1.9%. The top line improved 10.3% on a year-over-year basis and 11.1% at constant currency (cc).

For full-year 2021, the company reported revenues of $17.11 billion, up 19.2% from the previous year. The figure beat the consensus mark by 0.5%.

Revenues by Geography

Revenues in the United States were $3.42 billion, up 10.3% year over year. International sales were up 10.2% to $1.28 billion.

Segmental Analysis

Effective from Dec 31, 2021, Stryker has updated its reportable business segments to align to its new internal reporting structure.

MedSurg and Neurotechnology: This segment reported sales of $2.64 billion, which improved 8.7% on a year-over-year basis. Sales at the segment rose 9.4% at cc. Improvement across all its sub segments contributed to the upside. Per management, the segment saw 9.2% organic growth in the reported quarter.

Stryker Corporation Price, Consensus and EPS Surprise

Stryker Corporation Price, Consensus and EPS Surprise
Stryker Corporation Price, Consensus and EPS Surprise

Stryker Corporation price-consensus-eps-surprise-chart | Stryker Corporation Quote

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Orthopaedics and Spine: Sales in the segment amounted to $2.06 billion, up 12.5% year over year and 13.3% at cc. Per management, the upside can be attributed to strength in Trauma and Extremities and Knees sub segments, and strong demand for Mako.

Margins

In the fourth quarter, adjusted gross profit totaled $3.09 billion, up 11.4% from the year-ago quarter. Adjusted gross margin was 65.8%, up 70 basis points (bps).

Total operating expenses were $2.23 billion, up 13.1% from the year-ago quarter.

Adjusted operating income amounted to $1.29 billion, up 3.2% from the prior-year quarter. Adjusted operating margin was 27.3%, down 190 bps.

Financial Update

The company exited the fourth quarter with cash and cash equivalents of $2.94 billion, compared with $2.56 billion in the preceding quarter.

Cumulative net cash provided by operating activities in the fourth quarter was $3.26 billion, compared with $3.28 billion in the year-ago period.

2022 Outlook

The company will continue to track and evaluate the impact of the COVID-19 pandemic on its operations and financial results. Presently, Stryker anticipates organic net sales growth between 6% and 8%.

Adjusted EPS is projected in the band of $9.60 to $10. The Zacks Consensus Estimate for the same is pegged at $10.10.

Wrapping Up

Stryker exited fourth-quarter 2021 on a mixed note, wherein earnings missed the consensus mark but revenues beat the same. Nonetheless, the company witnessed strong performance across the segments. Growth in international sales is an added positive. Expansion in gross margin in the reported quarter buoys optimism.

Per management, despite the COVID-19 led disruptions, the company managed to deliver robust growth in both of its businesses, while demonstrating promising integration of Wright Medical.

However, contraction in operating margin is disappointing. Stryker continues to grapple with pricing pressure. Stiff competition in the MedTech space remains a concern.

Zacks Rank

Stryker currently carries a Zacks Rank #4 (Sell).

Key Picks

Some better-ranked stocks which are supposed to report earnings soon are AMN Healthcare Services, Inc. AMN, Henry Schein, Inc. HSIC and Laboratory Corporation of America Holdings LH.

AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 19.5%. The company currently sports a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. The company’s earnings yield of 5.5% compares favorably with the industry’s 0.8%.

Henry Schein surpassed earnings estimates in each of the trailing four quarters, the average surprise being 21.9%. The company currently carries a Zacks Rank of 2.

Henry Schein’s long-term earnings growth rate is estimated at 11.8%. The company’s earnings yield of 5.9% compares favorably with the industry’s 4.1%.

Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. The company currently sports a Zacks Rank #1.

Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. The company’s earnings yield of 6.9% compares favorably with the industry’s 4.4%.


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Stryker Corporation (SYK) : Free Stock Analysis Report

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