ResMed Inc (RMD, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $185.62, ResMed Inc has witnessed a daily loss of 1.5%, marked against a three-month change of 13.76%. A thorough analysis, underlined by the GF Score, suggests that ResMed Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 10/10
- Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks across the board and a slightly lower momentum rank, GuruFocus assigned ResMed Inc the GF Score of 99 out of 100, which signals the highest outperformance potential.
Understanding ResMed Inc Business
ResMed Inc, with a market cap of $27.30 billion and sales of $4.50 billion, is a leading name in the respiratory care device industry. The company's operating margin stands at 26.98%, reflecting its efficiency in managing expenses relative to its revenue. ResMed Inc specializes in developing and supplying flow generators, masks, and accessories for the treatment of sleep apnea. The increasing diagnosis of sleep apnea, coupled with ageing populations and rising obesity rates, has led to a structurally growing market. ResMed Inc generates approximately two-thirds of its revenue in the Americas, with the remainder spread across Europe, Japan, and Australia. The company has recently focused on digital health initiatives, aiming to differentiate itself by providing clinical data for patients, medical care advisors, and payers in the out-of-hospital setting.
Financial Strength Breakdown
According to the Financial Strength rating, ResMed Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for ResMed Inc stands impressively at 20.71, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 9.27, ResMed Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.31, ResMed Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows ResMed Inc's impressive standing among its peers in generating profit. The company's Operating Margin has increased over the past five years, with a current figure of 27.28%, up from 24.40% in 2019. This trend indicates ResMed Inc's growing efficiency in converting sales into actual profit. Additionally, ResMed Inc's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence in the company's financial health.
Growth Rank Breakdown
Ranked highly in Growth, ResMed Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 12.2%, which outperforms 61.96% of companies in the Medical Devices & Instruments industry. Moreover, ResMed Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 10.4, and the rate over the past five years is 15.2. This trend accentuates the company's continued capability to drive growth.
Next Steps
Considering ResMed Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores using the GF Score Screen. As ResMed Inc continues to innovate and expand in the dynamic healthcare sector, it remains a compelling choice for value investors seeking growth and stability.
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.
