Intuitive Surgical Inc (ISRG, Financial) recently reported a daily gain of 3.66%, reflecting a 3-month gain of 1.55%, with an Earnings Per Share (EPS) of $4.25. Investors seeking value might ponder, is the stock modestly undervalued? This analysis delves into the valuation of Intuitive Surgical (ISRG), encouraging readers to explore the financial intricacies that contribute to its current market position.
Company Introduction
Intuitive Surgical develops and markets a revolutionary robotic system designed to enhance minimally invasive surgery. The company has achieved a significant global footprint, with over 8,000 da Vinci systems installed in hospitals, nearly 5,000 of which are in the U.S., and an expanding presence in emerging markets. With a current stock price of $303.95 and a market cap of $107 billion, Intuitive Surgical presents an interesting case when compared to its Fair Value (GF Value) of $349.76, indicating potential undervaluation.
Summarize GF Value
The GF Value is a unique calculation of a stock's intrinsic value, incorporating historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. Intuitive Surgical (ISRG, Financial) is considered modestly undervalued as per this measure. The implication for investors is that the long-term return of ISRG's stock could surpass its business growth, making it an attractive investment opportunity.
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Financial Strength
Assessing a company's financial strength is crucial to avoiding permanent capital loss. Intuitive Surgical boasts a remarkable cash-to-debt ratio of 10000, ranking higher than 99.52% of its peers in the Medical Devices & Instruments industry. With an overall financial strength rating of 10 out of 10, Intuitive Surgical's robust financial health is evident.
Profitability and Growth
Consistent profitability is a hallmark of a less risky investment. Intuitive Surgical has maintained profitability over the past decade, with an impressive operating margin of 24.66%, outperforming 89.52% of competitors. This solid profitability is reflected in its perfect score of 10 out of 10. However, Intuitive Surgical's growth trajectory, with a 3-year average revenue growth rate surpassing 61.29% of the industry, shows room for improvement when compared to its peers.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) provides insight into its value creation. Intuitive Surgical's ROIC of 18.19 exceeds its WACC of 14.46, signaling effective capital allocation and shareholder value generation.
Conclusion
In summary, Intuitive Surgical (ISRG, Financial) is deemed modestly undervalued. The company's financial foundation is solid, and its profitability is robust. Its growth, while competitive, indicates potential areas for improvement. For a deeper understanding of Intuitive Surgical's financials, investors can explore their 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
