On August 04, 2026, we delve into the DCF analysis for Intuitive Surgical Inc ISRG, a company that has experienced significant price fluctuations recently. The stock has seen a 5.2% increase over the past week, but it remains down 33.7% year-to-date and 22.3% over the last year.
- DCF Earnings-based intrinsic value of $208.16 vs current price of $375.41 (margin of safety: -80.3%)
- DCF FCF-based intrinsic value of $108.91 vs current price (second opinion)
- GF Scoreâ„¢ of 91/100 indicates high reliability of the DCF inputs
What Is ISRG Worth? DCF Earnings-Based Model
The DCF earnings-based model for Intuitive Surgical Inc employs a two-stage approach, projecting earnings growth over the first ten years and a terminal growth rate for the subsequent ten years. The model assumes a current EPS of $10.23, growing at an annual rate of 13.6% for the first decade, followed by a terminal growth rate of 4% for the next ten years.
| Parameter | Value |
|---|---|
| Current EPS (TTM, excl. non-recurring) | $10.23 |
| 10-Year Growth Rate | 13.6% |
| 10-Year Treasury Rate | 4.70% |
| Discount Rate (ceil(Treasury) + 6%) | 11% |
| Terminal Growth Rate | 4% |
The calculation summary for the two-stage DCF model is as follows:
| Stage | Description | Value |
|---|---|---|
| Growth Stage (Years 1-10) | EPS growing at 13.6%, discounted at 11% | $116.45 |
| Terminal Stage (Years 11-20) | 4% terminal growth, discounted at 11% | $91.71 |
| Intrinsic Value | Growth + Terminal | $208.16 |
With the current price at $375.41, the intrinsic value of $208.16 indicates that the stock is significantly overvalued, with a margin of safety of -80.3%. It is important to note that GuruFocus utilizes EPS excluding non-recurring items, as research indicates that stock prices are more closely correlated with earnings than free cash flow. For further details, you can explore the ISRG DCF Calculator.
What Does the Free Cash Flow DCF Say?
The free cash flow (FCF)-based intrinsic value for Intuitive Surgical Inc is calculated at $108.91. When comparing this with the earnings-based intrinsic value of $208.16, the two models present a clear disagreement. The FCF model also indicates that the stock is significantly overvalued, with a margin of safety of -244.7%.
How Does GF Valueâ„¢ Compare to the DCF Models?
The GF Valueâ„¢ for Intuitive Surgical Inc stands at $616.69, offering a third perspective on valuation. This proprietary measure from GuruFocus is derived from historical trading multiples, past business growth, and future performance estimates. In this case, the GF Valueâ„¢ suggests a more favorable view compared to both DCF models, highlighting a significant discrepancy in valuation perspectives. For more insights, visit the GF Valueâ„¢ page.
What Does ISRG's GF Scoreâ„¢ Tell Us?
The GF Scoreâ„¢ evaluates a stock's overall quality based on various factors, including financial strength, profitability, growth potential, and valuation metrics. Intuitive Surgical Inc boasts a GF Scoreâ„¢ of 91/100, indicating strong fundamentals. However, its predictability rank is only 2 out of 5 stars, suggesting that the DCF model's reliability for this stock is limited.
| Metric | Rating |
|---|---|
| GF Scoreâ„¢ | 91/100 |
| Financial Strength | 10/10 |
| Profitability | 10/10 |
| Growth | 10/10 |
| Valuation | 4/10 |
| Momentum | 4/10 |
Key Assumptions and Limitations
It is essential to recognize that DCF models are highly sensitive to the assumptions made regarding growth rates and discount rates. Stocks with low predictability ratings, such as Intuitive Surgical Inc, yield less reliable DCF estimates. The terminal growth rate of 4% is a simplifying assumption that may not fully capture future market dynamics.
What This Means for Investors
In synthesizing the three valuation models—DCF earnings, DCF FCF, and GF Value™—a clear tension emerges. The earnings-based DCF and GF Value™ suggest differing valuations, with the earnings DCF indicating significant overvaluation while GF Value™ presents a more favorable outlook. Additionally, the guru ownership signal is noteworthy, with 19 gurus currently holding the stock, 11 of whom have increased their positions, while insiders have sold $2.9 million worth of shares over the past three months. This mixed signal adds complexity to the investment narrative. Investors should carefully consider these insights and can explore more through the ISRG DCF Calculator.
Frequently Asked Questions
What is ISRG's intrinsic value based on DCF?
earnings-based $208.16, FCF-based $108.91
Is ISRG overvalued or undervalued?
ISRG is significantly overvalued based on both DCF models and GF Valueâ„¢.
How reliable is the DCF model for ISRG?
The DCF model's reliability for ISRG is limited due to its predictability rank of 2 out of 5 stars.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
