Smith & Nephew (SN) AI Stock Analysis

• Market Cap: £10.47B
• Dividend Yield: 2.33%
• Average Volume (3M): 3.93M
• Price to Earnings (P/E): 28.4
• Beta (1Y): 0.90
• Revenue Growth: 2.51%
• EPS Growth: 56.56%
• Country: UK
• Employees: 17,349
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Devices
• EPS (TTM): 0.32
• Shares Outstanding: 849,724,000
• 10 Day Avg. Volume: 2,834,900
• 30 Day Avg. Volume: 3,927,868
• PEG Ratio: 0.50
• Price to Book (P/B): 2.07
• Price to Sales (P/S): 1.87
• P/FCF Ratio: 17.94
• 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: £1,464.33
• Price Target Upside: 18.71% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Outperform
• Price Target: 1,366.00p ▲(10.74% Upside)

Smith & Nephew's strong financial performance and positive earnings call sentiment are offset by technical indicators suggesting bearish momentum and a high valuation. While the company shows robust growth and operational efficiency, valuation concerns and market challenges, particularly in emerging markets and tariff uncertainties, weigh on the overall score.

Positive Factors

Revenue Growth

The consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial stability.

Cash Flow Management

Robust cash flow management enhances financial flexibility, enabling strategic investments and shareholder returns through buybacks.

Product Innovation

New product launches like the CENTRIO PRP System strengthen the product portfolio and drive competitive advantage in wound care.

Negative Factors

Emerging Markets Challenges

Performance issues in emerging markets, particularly China, can hinder growth prospects and market expansion efforts.

Tariff Uncertainty

Tariff uncertainties create cost pressures and potential disruptions, impacting profitability and strategic planning.

Reimbursement Headwinds

Changes in reimbursement policies can adversely affect sales and profitability, particularly in the Advanced Wound Management segment.

Smith & Nephew Business Overview & Revenue Model

Company Description

Smith & Nephew plc, together with its subsidiaries, develops, manufactures, markets, and sells medical devices worldwide. The company offers knee implant products for knee replacement procedures; hip implants for the reconstruction of hip joints; and trauma and extremities products that include internal and external devices used in the stabilization of severe fractures and deformity correction procedures. It also provides sports medicine joint repair products for surgeons, including instruments, technologies, and implants necessary to perform minimally invasive surgery of the joints, such as the repair of soft tissue injuries and degenerative conditions of the knee, hip, and shoulder, as well as meniscal repair systems. In addition, the company offers arthroscopic enabling technologies comprising fluid management equipment for surgical access, high-definition cameras, digital image capture, scopes, light sources, and monitors to assist with visualization inside the joints, radio frequency, electromechanical and mechanical tissue resection devices, and hand instruments for removing damaged tissue; and ear, nose, and throat solutions. Further, it provides advanced wound care products for the treatment and prevention of acute and chronic wounds, which comprise leg, diabetic and pressure ulcers, burns, and post-operative wounds; advanced wound bioactives, including biologics and other bioactive technologies for debridement and dermal repair/regeneration, as well as regenerative medicine products including skin, bone graft, and articular cartilage substitutes; and advanced wound devices, such as traditional and single-use negative pressure wound therapy, and hydrosurgery systems. It primarily serves the healthcare providers. Smith & Nephew plc was founded in 1856 and is headquartered in Watford, the United Kingdom.

How the Company Makes Money

Smith & Nephew generates revenue through the sale of medical devices and related services across its three main sectors. The company earns money primarily from the sale of advanced wound care products, orthopedic implants, and sports medicine solutions. Key revenue streams include direct product sales to hospitals, surgical facilities, and healthcare providers, as well as partnerships with distributors and medical professionals. Significant contracts with healthcare systems and innovative product launches also contribute to the company's earnings. Additionally, Smith & Nephew invests in research and development to create new technologies and improve existing products, which helps maintain a competitive edge and drives long-term growth.

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. However, there is room for improvement in optimizing capital expenditures and leveraging assets more effectively.

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.97B	5.81B	5.55B	5.21B	5.21B	4.56B
Gross Profit	4.18B	4.05B	3.82B	3.67B	3.67B	3.16B
EBITDA	1.44B	1.24B	956.00M	874.00M	1.24B	866.00M
Net Income	493.64M	412.00M	263.00M	223.00M	524.00M	448.00M
Balance Sheet
Total Assets	10.68B	10.35B	9.99B	9.97B	10.92B	11.01B
Cash, Cash Equivalents and Short-Term Investments	675.41M	619.00M	302.00M	350.00M	1.29B	1.76B
Total Debt	3.45B	3.32B	3.08B	2.87B	3.34B	3.69B
Total Liabilities	5.15B	5.09B	4.77B	4.71B	5.35B	5.73B
Stockholders Equity	5.53B	5.26B	5.22B	5.26B	5.57B	5.28B
Cash Flow
Free Cash Flow	799.32M	606.00M	181.00M	110.00M	469.00M	492.00M
Operating Cash Flow	1.15B	987.00M	608.00M	468.00M	877.00M	935.00M
Investing Cash Flow	-345.22M	-569.00M	-448.00M	-472.00M	-691.00M	-606.00M
Financing Cash Flow	-676.96M	-86.00M	-200.00M	-926.00M	-645.00M	1.16B

Smith & Nephew Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1233.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SN, the sentiment is Neutral. The current price of 1233.5 is below the 20-day moving average (MA) of 1239.82, below the 50-day MA of 1289.21, and above the 200-day MA of 1194.28, indicating a neutral trend. The MACD of -17.05 indicates Negative momentum. The RSI at 44.24 is Neutral, neither overbought nor oversold. The STOCH value of 40.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:SN.

Smith & Nephew Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HIK	75 Outperform	£3.33B	11.67	15.66%	4.20%	3.73%	27.13%
SN	70 Outperform	£10.47B	28.40	9.30%	2.33%	2.51%	56.56%
AMS	69 Neutral	£466.11M	50.71	3.66%	1.24%	68.03%	-18.27%
CTEC	68 Neutral	£4.72B	29.57	12.73%	2.08%	4.18%	37.65%
SPI	55 Neutral	£673.57M	36.39	2.51%	1.37%	6.95%	-34.38%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
CREO	49 Neutral	£41.87M	-1.70	―	―	―	―