Smith & Nephew (SN) AI Stock Analysis

• Market Cap: £12.02B
• Dividend Yield: 2.31%
• Average Volume (3M): 2.90M
• Price to Earnings (P/E): 31.8
• Beta (1Y): 1.01
• Revenue Growth: 2.51%
• EPS Growth: 56.56%
• Country: UK
• Employees: 17,349
• Sector: Healthcare
• Sector Strength: 47
• Industry: Medical - Devices
• EPS (TTM): 0.32
• Shares Outstanding: 872,221,600
• 10 Day Avg. Volume: 3,240,790
• 30 Day Avg. Volume: 2,899,602
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £1,400.27
• Price Target Upside: 1.47% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

• Rating: 76 Outperform
• Price Target: ―

Smith & Nephew's strong financial performance and positive earnings call sentiment are the primary drivers of its stock score. The company's robust revenue growth, profitability improvements, and operational efficiencies are significant strengths. However, technical indicators suggest potential overbought conditions, and the valuation appears high, which could limit upside potential. Challenges in China and tariff headwinds also pose risks.

Positive Factors

Earnings and Valuation

Analysts reiterate a buy rating due to upside risks in earnings and valuation, with targets set for higher earnings per share and valuation ratios.

Sales Growth

The company's third-quarter sales growth is strong, with an increase of 7.6%, and there are no negative impacts from trading days, indicating a positive outlook.

Share Buyback

A $500 million share buyback is planned, indicating confidence in the company's financial health and potential to return value to shareholders.

Negative Factors

China Ortho Sales

Ortho sales in China were significantly down and are expected to continue at the same extent in the near term.

Revenue Guidance

Lack of revenue guidance upgrade reflects procedure, macro uncertainty.

Skin Substitutes Market

New coverage in the skin substitutes market is expected to be a headwind, indicating potential challenges in this business segment.

Smith & Nephew Business Overview & Revenue Model

Company Description

Smith & Nephew (SN) is a global medical technology company that focuses on the innovation and development of advanced medical devices and solutions. The company operates primarily in three sectors: Orthopaedics, Advanced Wound Management, and Sports Medicine. Its core products include joint implants, wound care products, and surgical instruments, which are designed to enhance surgical outcomes and improve patient recovery. Smith & Nephew is committed to delivering high-quality healthcare solutions through continuous research and development.

How the Company Makes Money

Smith & Nephew generates revenue through the sale of its medical devices and products across its three primary sectors. The Orthopaedics segment, which includes joint reconstruction and trauma products, is a significant revenue driver, as it caters to the growing demand for hip and knee replacement surgeries. The Advanced Wound Management division contributes by providing innovative wound care solutions, addressing the needs of patients with chronic and acute wounds. The Sports Medicine sector focuses on arthroscopy and other minimally invasive surgical procedures, which are gaining popularity in the healthcare market. Moreover, Smith & Nephew benefits from strategic partnerships with healthcare providers and payers, as well as collaborations with research institutions to enhance product offerings. The company also invests in marketing and sales initiatives to promote its products, ensuring a steady stream of revenue.

Smith & Nephew Financial Statement Overview

Summary

Smith & Nephew exhibits strong financial health with consistent revenue growth and profitability improvements. The company efficiently manages its operating costs and debt levels, leading to enhanced net income and shareholder returns. Cash flows are robust, providing a solid foundation for future investments. Nonetheless, continuous focus on optimizing capital expenditures and leveraging assets more effectively will further strengthen its financial position.

Income Statement

The company's revenue has shown a consistent growth, rising 4.7% from 2023 to 2024. Gross profit margin remains strong at 69.6% in 2024, indicating effective cost management. Net profit margin improved from 4.7% in 2023 to 7.1% in 2024, showcasing enhanced profitability. EBIT and EBITDA margins also improved, reflecting operational efficiency. However, the growth rate could be higher compared to peers in the industry.

Balance Sheet

Smith & Nephew's debt-to-equity ratio stands at 0.63, indicating moderate leverage and effective use of debt. Return on equity increased to 7.8% in 2024, revealing improved shareholder value generation. The equity ratio is stable, although slightly lower than ideal industry standards, indicating room for improvement in reducing liabilities relative to assets.

Cash Flow

The company demonstrated strong cash flow management with operating cash flow exceeding net income, suggesting effective cash generation from operations. Free cash flow grew significantly by 234.8% from 2023 to 2024. Both operating and free cash flow to net income ratios are favorable, indicating robust cash flow relative to profitability. However, the high capital expenditures could impact future free cash flow growth.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.81B	5.55B	5.21B	5.21B	4.56B
Gross Profit	4.05B	3.89B	3.67B	3.67B	3.16B
EBITDA	1.22B	956.00M	943.00M	1.24B	866.00M
Net Income	412.00M	263.00M	223.00M	524.00M	448.00M
Balance Sheet
Total Assets	10.35B	9.99B	9.97B	10.92B	11.01B
Cash, Cash Equivalents and Short-Term Investments	619.00M	302.00M	350.00M	1.29B	1.76B
Total Debt	3.32B	3.08B	2.87B	3.34B	3.69B
Total Liabilities	5.09B	4.77B	4.71B	5.35B	5.73B
Stockholders Equity	5.26B	5.22B	5.26B	5.57B	5.28B
Cash Flow
Free Cash Flow	606.00M	181.00M	110.00M	469.00M	492.00M
Operating Cash Flow	987.00M	608.00M	468.00M	877.00M	935.00M
Investing Cash Flow	-569.00M	-448.00M	-472.00M	-691.00M	-606.00M
Financing Cash Flow	-86.00M	-200.00M	-926.00M	-645.00M	1.16B

Smith & Nephew Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1380.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SN, the sentiment is Positive. The current price of 1380 is above the 20-day moving average (MA) of 1318.67, above the 50-day MA of 1198.20, and above the 200-day MA of 1069.85, indicating a bullish trend. The MACD of 57.37 indicates Positive momentum. The RSI at 79.55 is Negative, neither overbought nor oversold. The STOCH value of 71.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:SN.

Smith & Nephew Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SN	76 Outperform	£12.02B	31.84	9.30%	2.31%	2.51%	56.56%
HIK	70 Outperform	£4.01B	14.17	15.66%	3.49%	3.73%	27.13%
SPI	69 Neutral	£909.36M	49.46	2.51%	1.03%	6.95%	-34.38%
AMS	65 Neutral	£436.97M	62.84	2.93%	1.27%	40.66%	-55.09%
CTEC	64 Neutral	£4.76B	29.65	12.73%	2.16%	4.18%	37.65%
Sector *	51 Neutral	$7.83B	-0.18	-40.10%	2.29%	21.46%	-2.03%
CREO	44 Neutral	£56.72M	―	-38.49%	―	―	―