The world of medical supplies and medical technology is a large one. There are a few big players in this realm. Innovation within this sector is key and everyone is looking to develop the next big thing.
One of the prominent names in this arena is Smith & Nephew (LSE:SN). Headquartered in Watford, the multinational company is an international producer of advanced wound management products. It also possesses further product ranges including surgical robotics and joint replacement systems.
Addressing the current coronavirus pandemic, I must admit I foresee a short-term impact on its share price and performance. This will be due to the cessation of elective surgeries while this pandemic is ongoing.
Smith & Nephew’s share price has taken a hit over the last month since the pandemic has worsened and affected markets. From around 1,900p, the share price tumbled to near 1,100p which is a 40% decrease. Fear not, I present these figures not as a deterrent, but as an opportunity. At such a cheap price, this could perhaps be a real bargain addition to your Stocks and Shares ISA.
Performance & growth viability
Just prior to the market crash, Smith & Nephew announced full-year results for 2019. Underlying revenue growth was up 4.4%, a significant increase on 2018’s 2%. Group sales surpassed $5bn for the first time in the firm’s history.
CEO Roland Diggelman described the results as “the best for several years.” Diggelman went on to suggest more money would be poured into research and development as well acquisitions. Although profit was slightly lower compared to 2018, this was primarily due to five completed acquisitions.
I always enjoy reading about acquisitions as it displays appetite for growth and success, especially in an industry where innovation is crucial.
Cash generated from operations was up approximately 25% compared to the previous year. The positive results also saw a 4% hike in the full-year dividend to 37.5 cents per share. These two takeaways, as well as the acquisitions, bode well for the longer-term viability of the company.
Numbers don’t lie
I once heard a saying, ‘Men lie, women lie, numbers don’t lie.’ Life experience has taught me this to be mostly true. Smith & Nephew’s numbers portray an impressive story of a well-run industry leader striving to grow and succeed.
Its share price over the year before the market crash shows an increase of approximately 40%. Further back, the previous three years showed an impressive increase of almost 65%. The dividend per share has also increased every year for the previous five years. The jump has been over 30% across this five-year period. A juicy number for potential investors.
The current price-to-earnings ratio sits at just over 22, which is healthy. Sustained profits across the past five years also indicate a measure of success.
At this point I would stress the above facts and figures point towards a company on a further upward trajectory. I believe that the market crash has presented this stock to be picked up at a relative cheap price. I am an advocate of any type of technological stock, especially as innovations always attract more investment and potential for good growth.