Smith & Nephew (SN) AI Stock Analysis

• Market Cap: £9.79B
• Dividend Yield: 3.18%
• Average Volume (3M): 1.76M
• Price to Earnings (P/E): 30.3
• Beta (1Y): 0.99
• Revenue Growth: 1.85%
• EPS Growth: 51.77%
• Country: UK
• Employees: 17,349
• Sector: Healthcare
• Sector Strength: 40
• Industry: Medical - Devices
• EPS (TTM): 0.35
• Shares Outstanding: 875,957,000
• 10 Day Avg. Volume: 1,269,469
• 30 Day Avg. Volume: 1,755,341
• PEG Ratio: 7.93
• Price to Book (P/B): 2.44
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 70.17
• Enterprise Value/Market Cap: 1.59
• Enterprise Value/Revenue: 0.86
• Enterprise Value/Gross Profit: 3.93
• Enterprise Value/Ebitda: 4.42
• 1Y Price Target: £1,254.50
• Price Target Upside: 14.41% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 76 Outperform
• Price Target: ―

Smith & Nephew demonstrates robust financial performance with consistent revenue growth and effective cost management. Earnings call insights reinforce confidence in future growth, despite pricing pressures and challenges in China. However, the high P/E ratio and neutral technical indicators suggest cautious optimism. Overall, the stock is positioned for moderate growth with potential upside if operational improvements continue.

Positive Factors

Earnings

Smith+Nephew had an encouraging start to 2025 in 1Q25, with organic growth at 3.1%, surpassing the initial guidance of 1%-2%.

Financial Management

Significant cost savings are being achieved, with expectations to reach $300 million by the end of 2025, indicating strong financial management.

Market Position

The company holds a strong position in the European market with its robotic platform, ranking as the #1 provider.

Negative Factors

Market Challenges

Sales and profits in China have significantly decreased, reducing the impact of the Chinese market on the overall group.

Market Sentiment

A back-end loaded FY25e guide is the key negative that could dent sentiment.

Operational Challenges

The orthopedic segment is currently not contributing positively, and the potential for robotics to gain market share has not materialized.

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 its medical devices and products across its three primary sectors. In the Orthopaedics sector, the company earns money by providing joint replacement systems and trauma devices used in surgical procedures. The Sports Medicine & ENT sector contributes to revenue through the sale of products used in minimally invasive surgery and treatments for ear, nose, and throat conditions. The Advanced Wound Management sector generates income from the sale of products designed to manage chronic and acute wounds. Additionally, Smith & Nephew benefits from strategic partnerships and collaborations with healthcare providers and research institutions, which help in expanding its market reach and driving sales growth. The company's global presence, with operations in over 100 countries, further supports its revenue streams by tapping into diverse markets and meeting the varying needs of healthcare systems worldwide.

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: 1096.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• 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 Positive. The current price of 1096.5 is below the 20-day moving average (MA) of 1103.75, above the 50-day MA of 1091.50, and above the 200-day MA of 1039.17, indicating a neutral trend. The MACD of 8.71 indicates Positive momentum. The RSI at 48.79 is Neutral, neither overbought nor oversold. The STOCH value of 34.44 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	£9.79B	30.30	7.78%	3.18%	1.85%	51.77%
HIK	68 Neutral	£4.39B	15.69	15.79%	2.90%	5.83%	83.35%
SPI	68 Neutral	£893.26M	35.24	3.41%	1.04%	11.20%	-6.80%
AMS	65 Neutral	£435.80M	61.03	2.93%	1.28%	40.66%	-55.09%
CTEC	64 Neutral	£4.99B	33.57	11.12%	2.24%	3.94%	41.63%
Sector *	52 Neutral	$7.39B	>-0.01	-63.86%	2.36%	16.15%	0.36%
CREO	48 Neutral	£52.07M	―	-38.49%	―	―	―