Intuitive Surgical Inc. (NASDAQ:ISRG) has experienced a mixed trading period, with a recent daily gain of 2.2% but a three-month loss of 8.09%. With an Earnings Per Share (EPS) of 3.99, investors are left wondering if the stock is undervalued. This article aims to provide a detailed valuation analysis of Intuitive Surgical to determine its true worth.
Intuitive Surgical is a company that develops, produces, and markets robotic systems for minimally invasive surgery. It has placed over 8,000 da Vinci systems in hospitals worldwide, making it a leader in the industry. Currently priced at $302.05 per share, with a GF Value of $361.57, the stock appears to be modestly undervalued.
The GF Value is a metric that reflects the intrinsic value of a stock, taking into account trading multiples, past performance, and future business estimates. According to GuruFocus Value calculation, Intuitive Surgical’s stock is modestly undervalued. This suggests that the long-term return of the stock is likely to be higher than its business growth.
Financial strength is an important factor to consider when evaluating a company’s stock. Intuitive Surgical has a strong financial health, with a cash-to-debt ratio that ranks better than 99.88% of companies in the industry. Additionally, the company has been consistently profitable over the past 10 years, with a strong operating margin of 24.34%.
Growth is another crucial aspect to assess. Intuitive Surgical’s 3-year average revenue growth rate is better than the majority of companies in the industry. However, its 3-year average EBITDA growth rate is lower than 53.66% of companies in the industry. This indicates room for improvement in terms of profitability.
Comparing the company’s return on invested capital (ROIC) to its weighted average cost of capital (WACC) provides further insight into profitability. Intuitive Surgical’s ROIC is higher than its WACC, suggesting that the company is creating value for shareholders.
In conclusion, the stock of Intuitive Surgical appears to be modestly undervalued based on its financial strength, profitability, and analysis of its intrinsic value. Investors should consider the potential for long-term returns with this medical robotics company.
- Earnings Per Share (EPS): A company’s profit divided by the number of outstanding shares, representing the portion of a company’s profit allocated to each outstanding share.
- GF Value: A proprietary measure that reflects the intrinsic value of a stock, taking into account historical trading multiples, past performance, and future business estimates.
- ROIC: Return on Invested Capital measures how well a company generates cash flow relative to the capital it has invested in its business.
- WACC: Weighted Average Cost of Capital is the rate a company is expected to pay on average to all its security holders to finance its assets.
- GuruFocus: (source article)