Stryker Corporation (NYSE:SYK) traded at around $280 on October 6, 22.75% lower over twelve months. Boston Scientific Corporation (NYSE:BSX) traded near $42 over the same session, down 55.79% across the year and within sixty cents of its 52-week low.
Boston Scientific reports the better margins of the two, which makes the larger fall the thing to explain.
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The Income Statement Favors the Stock That Fell Further:
On profitability, the comparison does not go the way the share prices suggest. Boston Scientific runs a 69.19% gross margin against 65.59% at Stryker, and a 17.50% net margin against 14.43%.
So the company whose shares halved is keeping more of each dollar of revenue than the company that fell by a fifth. Growth is close enough to be a tie, at 9.40% quarterly revenue growth for Stryker against 7.50%. On those figures alone, Boston Scientific would be the better business of the two. The income statement is not where this comparison resolves.
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The Cash Statement Reverses the Answer:
Put the free cash flow beside the reported profit, and the two companies change places. Stryker earned $3.73 billion and generated $4.71 billion of free cash flow. Boston Scientific earned $3.67 billion and generated $1.81 billion.
Nearly identical profits produce cash figures that differ by more than two and a half times.
The cause is capital spending. Boston Scientific put $2.72 billion into property and equipment against $820 million at Stryker.
A company spending that heavily may be building for growth it has not yet reported, or running a business that costs more to maintain. Until that resolves, the lower multiple at Boston Scientific is measuring earnings that are not arriving as cash.
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The Valuation Case:
Sustainability for both rests on hospital capital budgets, which move with elective procedure volumes rather than with the economy. On price, Boston Scientific is cheaper on each earnings measure, at 12.49 times forward against 16.82, with a PEG ratio of 0.60 against 1.29.
Enterprise value to EBITDA tells the same story at 12.92 against 16.45.
The balance sheets are close. Debt-to-equity is 50.15% at Boston Scientific and 64.39% at Stryker, and neither is stretched.
Conclusion:
Boston Scientific wins on margins and on each valuation measure here, which is the case for the stock that fell 55.79%. A 69.19% gross margin and 12.49 times forward earnings against 16.82 is a genuine discount. However, it converted $3.67 billion of profit into $1.81 billion of free cash while Stryker turned $3.73 billion into $4.71 billion, and the difference is $2.72 billion of capital spending. The number to watch is free cash flow at Boston Scientific, because the cheap multiple only means something once the earnings arrive in cash.
Market Sentiment:
Stryker Corporation was held by 72 hedge funds with a combined stake value of about $3.53 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 81 hedge fund holders with a cumulative investment value of around $3.67 billion in the previous quarter.
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This article is originally published at Insider Monkey.
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