Core Insights - Medtronic plc (MDT) is set to report its first-quarter fiscal 2026 results on August 19, with adjusted earnings in the last quarter exceeding estimates by 2.53% [1][2] - The Zacks Consensus Estimate for Q1 revenues is $8.37 billion, indicating a year-over-year growth of 5.7%, while earnings per share (EPS) is estimated at $1.23, flat compared to the previous year [2][12] - EPS estimates have declined by 6.8% over the past 90 days, reflecting challenges from rising costs and inflationary pressures [3][4] Financial Performance - Medtronic has consistently beaten earnings estimates in the last four quarters, with an average surprise of 2.21% [1] - The company’s adjusted gross margin decreased by 70 basis points year-over-year in Q4 fiscal 2025 due to foreign exchange impacts [9] - The company expects a 1-2% unfavorable impact on quarterly revenues from foreign exchange at recent rates [11] Business Segments and Growth Drivers - The separation of the Diabetes business, which accounted for about 8% of total revenue, may have affected quarterly performance [5][13] - Despite challenges, Medtronic has shown resilience with mid-single-digit organic revenue growth and strong performance in several segments, including pulse field ablation, TAVR, and neuromodulation [14][15] - The company is expected to report growth in its Neuromodulation segment, driven by closed-loop sensing technology [17] Market Position and Valuation - Medtronic's stock rose 9.3% in the fiscal first quarter, outperforming the industry and S&P 500 [25] - The company trades at a forward P/E ratio of 16.23, significantly below the industry average of 22.00 and the S&P 500's 21.19, indicating a potential undervaluation [26] - Medtronic's liquidity position is strong, with cash and cash equivalents of $8.97 billion against total debt of $28.5 billion [22][23] Strategic Outlook - The company is focusing on foundational changes, including improving global operations and investing in fast-growth MedTech markets [19][20] - Medtronic's highest growth opportunities are in markets growing faster than the overall company, particularly in Cardiac Ablation [21] - The ongoing transformation and exposure to strong secular growth markets position Medtronic for long-term growth despite macroeconomic headwinds [29]