SYK

Stryker is exactly the kind of durable franchise you want to own: five straight years of double-digit revenue growth ($17.1B in 2021 to $25.1B in 2025, +11.2% reported, +10.3% organic constant-currency), a fat and stable 64.0% gross margin, $5.04B of operating cash flow (+18.9%), and a diversified two-segment model where MedSurg & Neurotechnology (+15.7%) is more than offsetting a softer Orthopaedics (+4.3%). The reported +32.5% jump in operating income flatters the picture — it largely reflects the goodwill impairment falling from $977M in 2024 to $170M in 2025 — but the underlying engine is real: adjusted diluted EPS grew 11.8% to $13.63, and U.S. sales (+12.2%) are accelerating. ROE of 14.5% and a 64% gross margin confirm a high-quality, R&D-funded ($1.62B) moat in surgical implants and navigation.

The problem is price, not the business. At $332.71 the stock trades at 39.6x trailing GAAP diluted EPS of $8.40 and 5.1x sales — a rich multiple that already capitalizes the growth and quality. Even on management's adjusted $13.63 EPS the P/E is ~24x, fair but not cheap for low-double-digit earnings growth. Notably, the company's own 10-K total-return chart shows the stock returned 151.0 vs. the S&P 500's 196.2 since 2020 and roughly tracked the Health Care index — the multiple is doing the heavy lifting, not beating the market. With the stock up 5.25% today and near the high end of its range, you are not being handed a discount.