SYK Stock Study (5-25-26)

Posted by Mark on June 2, 2026 at 07:03 | Last modified: May 25, 2026 09:37

I recently did a stock study on Stryker Corp. (SYK, $316.48).

M* writes:

     > Stryker designs, manufactures, and markets an array of medical
     > equipment, instruments, consumable supplies, and implantable
     > devices. The product portfolio includes hip and knee replacements,
     > extremities, endoscopy systems, operating room equipment,
     > embolic coils, hospital beds and gurneys, and orthopedic robotics.
     > Stryker remains one of the three largest competitors in
     > reconstructive orthopedic implants and holds the leadership position
     > in operating room equipment. Roughly one-fourth of Stryker’s total
     > revenue currently comes from outside the United States.

Over the past decade, this large-size company grows sales and EPS at annualized rates of 9.0% and 8.4%, respectively. Lines are mostly up, straight, and parallel [especially since COVID-19] except for sales+EPS dip in ’20, an additional EPS dip in ’24, and additional EPS declines in ’17 and ’19. Five- (10-) year earnings R^2 is 0.81 (0.39) and Value Line (VL) gives an Earnings Predictability score of 95. Shares outstanding increase 2.6% (0.2%/year).

Over the past decade, PTPM matches the industry and leads peers while ranging from 13.6% in ’20 to 18.0% in ’25 with a last-5-year mean of 15.8%. ROE leads peer and industry averages while ranging from 9.6% in ’17 to 35.5% in ’18 with a last-5-year mean of 15.0% (shareholder equity consistently positive and increasing with mean 9.9%/year). Debt-to-Capital is less than the industry but greater than peers while ranging from 39.7% in ’24 to 51.7% in ’20 with a last-5-year mean of 42.4%.

Quick Ratio is 1.0 and Interest Coverage 8.4 per M* who assigns “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BetterInvesting® website). VL rates the company A for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 8.6% and 8.4% for ’26 and ’27 (based on 25 analysts).
• Zacks gives YOY ACE 8.4% and 8.3% for ’26 and ’27, respectively (9 analysts).
• VL projects 7.8% per year from ’25-’30.
• CFRA projects 7.8% YOY and 8.3% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 8.4% per year and projects 5-year CAGR of 7.5% in Equity Report.

My 7.0% annualized forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 11.1% and 11.2% per year for ’25-’27 and ’25-’28, respectively (based on 30 analysts).
• Nasdaq.com gives ACE 10.8% and 11.0% per year for ’26-’28 and ’26-’29 (13 / 6 / 3 analysts for ’26 / ’28 / ’29).
• Seeking Alpha projects 4-year CAGR of 10.4%.
• Finviz gives 5-year annualized ACE of 11.4% (4).
• Argus projects 5-year CAGR of 11.0%.
• LSEG projects LTG of 15.2%.
• YF gives YOY ACE 9.9% and 11.6% for ’26 and ’27, respectively (27).
• Zacks gives YOY ACE 9.9% and 11.0% for ’26 and ’27 and 5-year CAGR of 10.6% (13).
• VL projects 9.9% per year from ’25-’30.
• CFRA projects 9.6% YOY and 10.7% per year for ’26 and ’25-’27 along with 3-year CAGR of 11.0%.
• M* gives long-term 14.0%/year ACE and projects 5-year CAGR of 12.3% (lesser of adjusted/GAAP) in Equity Report.

My 9.0% forecast is below the long-term-estimate range (mean of eight: 11.9%). Initial value is ’25 EPS of $8.40/share rather than 2026 Q1 EPS of $8.64 (TTM).

My Forecast High P/E is 37.0. Over the past 10 years, high P/E ranges from 19.3 in ’18 to 59.9 in ’17 with a last-5-year mean of 47.3 and last-5-year-mean average P/E of 41.6. I am near bottom of the range [only ’18 and ’16 (28.4) are less].

My Forecast Low P/E is 27.0. Over the past 10 years, low P/E ranges from 15.5 in ’18 to 43.5 in ’17 with a last-5-year mean of 35.9. I am forecasting near bottom of the range [only ’18 and ’16 (19.9) are less].

My Low Stock Price Forecast (LSPF) of $226.80 is default based on initial value from above: 28.3% less than previous close and 19.3% less than 52-week low.

Over the past 10 years, Payout Ratio (PR) ranges from 20.7% in ’18 to 65.1% in ’17 with a last-5-year mean of 43.0%. I am forecasting below the range at 20.0%.

These inputs land SYK in the HOLD zone with a U/D ratio of 1.8. Total Annualized Return (TAR) is 9.1%.

PAR (using Forecast Average—not High—P/E) of 6.1% is less than I seek for a large-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with Member Sentiment (MS). Based on 134 studies done in the past 90 days (50 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 8.4%, 11.0%, 43.3, 33.6, and 43.0%, respectively. I am lower across the board. VL projects a future average P/E of 26.5 that is much less than MS (38.5) and less than mine (32.0).

MS high / low EPS are $14.55 / $8.38 versus my $12.92 / $8.40 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $21.85 ($19.22—lesser of adjusted/GAAP) soars above both.

MS LSPF of $274.20 implies a Forecast Low P/E of 32.7: less than the above-stated 33.6. MS LSPF is 2.6% less than the default $8.38/share * 33.6 = $281.57 resulting in more conservative zoning. MS LSPF exceeds mine by 20.9%, however.

MOS is robust in the study because [excepting VL future average P/E] my inputs are near or less than historical/analyst/MS averages/ranges. Also supportive of the MOS is MS TAR exceeding mine by 5.8% per year and my substantially lower LSPF.

With regard to valuation, PEG is 2.0 and 3.7 per Zacks/M* and my projected P/E, respectively: somewhat overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.88. “Quick and Dirty” DCF method has stock undervalued by 11% while M* reports the stock to be fairly valued.

Per U/D, SYK is a BUY under $289/share. BetterInvesting® TAR criterion is met [478.0 / ((14.37 / 100 ) +1 ) ^ 5] ~ $244 given a forecast high price of $478.

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