U.S. stocks edge higher; solid earnings season continues
Smith+Nephew (LSE:SN, NYSE:SNN), a global medical technology business with a market capitalization of $12.2 billion, announced its fourth quarter and full-year results for 2024, revealing strong performance and growth. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment, with analysts setting price targets up to $38 per share. The company’s transformative 12-Point Plan has resulted in higher revenue growth, margin expansion, and improved cash flow, positioning it for an even stronger performance in 2025.
For the full year 2024, Smith+Nephew reported revenue of $5,810 million, an increase from $5,549 million in 2023, with underlying revenue growth of 5.3%. The reported growth of 4.7% included a -60bps foreign exchange headwind. The company maintains strong financial health with a "GOOD" overall score from InvestingPro, supported by impressive gross profit margins of 70.3% and a healthy current ratio of 2.51. The company’s trading profit grew 8.2% to $1,049 million, with a trading profit margin of 18.1%, up from 17.5% in 2023. Reported operating profit improved to $657 million, compared to $425 million the previous year.
Chief Executive Officer Deepak Nath commented on the company’s success, noting that operational and commercial improvements have consistently driven revenue growth above historical levels. The company’s restructured organizational model has increased accountability and contributed to margin expansion despite significant sector-wide challenges. Strong cash flow generation and better returns have been achieved through disciplined working capital management and asset utilization.
The fourth quarter of 2024 saw revenue of $1,571 million, an 8.3% underlying revenue growth, which includes the benefit of two extra trading days. The strong finish to the year was seen across all regions except China, with the US Reconstruction segment showing sequential improvement.
Looking ahead to 2025, Smith+Nephew expects another year of robust revenue growth and a significant step-up in trading profit margin. The company anticipates an underlying revenue growth of around 5% and a full-year trading profit margin in the range of 19.0% to 20.0%. This outlook reflects continued momentum and efficiency gains expected to drive further margin expansion beyond 2025.
Smith+Nephew’s full-year dividend remains at 37.5¢ per share, consistent with 2023, maintaining its impressive 48-year streak of consecutive dividend payments. For deeper insights into Smith+Nephew’s financial health, valuation metrics, and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of what really matters for this medical technology leader. An analyst conference call to discuss the results will be held today, details of which can be found on the Smith+Nephew website.
The company’s 12-Point Plan, focused on fixing Orthopaedics, improving productivity, and accelerating growth in Advanced Wound Management and Sports Medicine & ENT, has been instrumental in transforming Smith+Nephew into a consistently higher-growth company. With nearly 50 new products launched over the last three years and an exciting pipeline for 2025, Smith+Nephew is confident in its ability to unlock substantial value for shareholders.
This information is based on a press release statement.
In other recent news, Smith+Nephew PLC is preparing to release its full-year results for 2024 on February 25, 2025. The financial disclosure will provide insights into the company’s operational and financial performance, with investors keenly anticipating the announcement. The company reported annual sales of $5.5 billion in 2023, setting a benchmark for the upcoming results. Additionally, Smith+Nephew has appointed Sybella Stanley as an independent Non-Executive Director, effective February 1, 2025. Stanley will join the Remuneration Committee and is set to become its Chair in June 2025. Her extensive experience in corporate finance and previous roles in similar capacities are expected to strengthen the board’s composition. Rupert Soames, Chair of Smith+Nephew, highlighted the importance of effective succession planning and diverse talent in the board’s strategy. These developments are crucial as Smith+Nephew continues to navigate the global medical technology sector.
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