THE BUSINESSWEEK 50 RANKINGS + 25

31

Stryker

With knees, hips, and other parts of affluent boomers bearing the wear and tear of aging, implant maker Stryker keeps the gains coming. Earnings jumped nearly 21% last year, to $778 million, on an 11% hike in sales. Even as pressure mounts on prices in the feverishly competitive orthopedic-implant arena, Stryker is posting high single-digit annual gains in sales of replacements for everything from aging joints to reconstructions after accidents or other traumas. Its surgical gear remains a big winner, with sales up nearly 16% last year, to more than $2 billion. Stryker’s equipment is used in such areas as minimally invasive endoscopic surgery, which shows no signs of slowing. With investors upbeat, its stock is hovering in the 60s, up from a low of less than 40 last summer. CEO Stephen MacMillan’s challenge: avoid commoditization, which Stryker plans to do by using its $800 million in free cash to buy makers of innovative devices.

Overall Grade

A

Market Data

SYK

Market Value
(2/28/2007)

$25.3 Billion

Profitability*

31.2%

A-

Sales Growth Rate**

14.2%

B

12-Month Sales

$5.4 Billion

12-Month Net Income

$0.8 Billion

Total Return Past 12 Months

34.7%

Past 36 Months

41.0%

Economic SectorHealth Care
IndustryHealth Care Equipment
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
$FOOTNOTE

Stephen P. MacMillan

Stephen P. MacMillan, 42

CEO since 2005


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Data as of 2/28/07 provided by Standard & Poor's Compustat