St Jude Medical Inc. Stock Buy Recommendation Reiterated (STJ)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- St Jude Medical (NYSE:STJ) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

• EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:

• Net operating cash flow has increased to $396.00 million or 14.55% when compared to the same quarter last year. In addition, ST JUDE MEDICAL INC has also modestly surpassed the industry average cash flow growth rate of 7.35%.
• The gross profit margin for ST JUDE MEDICAL INC is currently very high, coming in at 78.10%. Regardless of STJ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.74% trails the industry average.
• ST JUDE MEDICAL INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ST JUDE MEDICAL INC reported lower earnings of $2.40 versus $2.51 in the prior year. This year, the market expects an improvement in earnings ($3.71 versus $2.40).
• STJ, with its decline in revenue, underperformed when compared the industry average of 8.6%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

St. Jude Medical, Inc. develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. It operates in four segments: Cardiac Rhythm Management, Cardiovascular, Atrial Fibrillation, and Neuromodulation. St Jude Medical has a market cap of $11.57 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 17.1, below the S&P 500 P/E ratio of 17.7. Shares are up 13.1% year to date as of the close of trading on Thursday.

You can view the full St Jude Medical Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

It's Official: Action Alerts PLUS beats the S&P 500 with Dividends Reinvested! Cramer and Link were up 16.72% in 2012. Were you? See what they are trading for 14-days FREE

 

For more information on St Jude Medical Inc. click any of the following:

• St Jude Medical Inc. Stock Price

• St Jude Medical Inc. Analyst Ratings

• St Jude Medical Inc. Key Stats & Profile

• St Jude Medical Inc. Earnings

• St Jude Medical Inc. Ratio Comparison

• St Jude Medical Inc. Growth Rates

• St Jude Medical Inc. Balance Sheet

• St Jude Medical Inc. Cash Flow

• St Jude Medical Inc. Income Statement