SNNSmith & Nephew plc
Is the business good?
The checks split: nothing decisive, though earnings fully cash-backed (2.0×).
Operating profit is fully backed by cash. Conversion is improving vs a year ago.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
A balanced mix of margins, efficiency, and leverage. ROE 12% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is SNN?
Smith & Nephew plc earns 7.9% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 1.1 points below what the capital costs: growth destroys value
- Operating margin
- 13%
Operating margin · Medical Devices median 2.1% · fiscal year to FY2025
- Cash conversion
- 2.02×
Cash conversion · 1.82× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −0.34%
Share count, year on year · flat: no meaningful dilution
| Year | Operating margin |
|---|---|
| FY2020 | 6.5% |
| FY2021 | 11% |
| FY2022 | 8.6% |
| FY2023 | 7.7% |
| FY2024 | 11% |
| FY2025 | 13% |
Details›
- Gross marginfiscal year to FY2025
- 68%
- Operating marginfiscal year to FY2025
- 13%
- Net marginfiscal year to FY2025
- 10%
- R&D as % of revenue
- 4.8%
- Revenue, trailing twelve months
- $6.16B
- Net income, trailing twelve months
- $625M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 7.9%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.