Stryker Corporation Stock Upgraded (SYK)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Stryker Corporation (NYSE: SYK) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • SYK's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 4.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 2.80, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $622.00 million or 9.31% when compared to the same quarter last year. In addition, STRYKER CORP has also vastly surpassed the industry average cash flow growth rate of -50.58%.
  • The gross profit margin for STRYKER CORP is currently very high, coming in at 70.71%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SYK's net profit margin of 4.78% significantly trails the industry average.
  • Compared to its closing price of one year ago, SYK's share price has jumped by 37.68%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

Stryker Corporation, a medical technology company, provides reconstructive, medical and surgical, and neurotechnology and spine products for doctors, hospitals, and other healthcare facilities. The company has a P/E ratio of 31.4, above the S&P 500 P/E ratio of 17.7. Stryker has a market cap of $27.73 billion and is part of the health care sector and health services industry. Shares are up 33.5% year to date as of the close of trading on Friday.

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

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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